Irish flag carrier Aer Lingus has advised its shareholders to ignore Ryanair’s latest bid call, as the Aer Lingus board remains firmly of the opinion that Ryanair’s offer is not in the interest of Aer Lingus’ shareholders.
It may be noted that Ryanair had offered to buy Aer Lingus for the third time in June offering €694 million for the flag carrier’s equity, or €1.3 per share.
Aer Lingus said, “The board remains of the view that Ryanair’s offer is not in the interests of shareholders, fundamentally undervalues the business and, due to the scale and extent of the competition issues, is likely once more to be prohibited by the European Commission (EC). Accordingly, the board unanimously recommends shareholders take no action in relation to the offer.”
The Irish carrier also noted that Ryanair which is its largest shareholder had not revised its terms of the bid despite having knowledge of the competition associated with the bid. Aer Lingus also claimed that Ryanair had undervalued the airline on several measures, and insisted it was a strong, standalone company.
Ryanair’s principle behind the bid is to form one strong Irish airline to compete with Air France-KLM, easyJet, Lufthansa and IAG.
The EC is to give its ruling on Ryanair’s bid on Wednesday. In 2007, the EC stopped Ryanair’s first acquisition bid on grounds that the combined entity would harm consumers by creating a monopoly or dominant position on 35 routes to and from Ireland.
Michael O’Leary, Ryanair’s chief executive, said that he expected the EC to launch a second phase of investigation into the company’s bid for Aer Lingus. The commission is conducting a phase one inquiry, which is due to conclude on August 29, and a follow-on investigation could last into next year.