Aer Lingus Considers Raised Bid From British Airways' Parent Company

NEW YORK ( The Deal) -- Ireland's Aer Lingus Group on Monday said its board is considering a sweetened takeover proposal from British Airways parent International Consolidated Airlines Group, having swiftly rejected two earlier bids. International Consolidated, or IAG's, revised offer of €2.55 a share breaks down into €2.50 a share and a cash dividend of €0.05 per share, Dublin-based Aer Lingus said. It values Aer Lingus at around €1.36 billion ($1.53 billion), based on 534 million outstanding shares. Aer Lingus advised shareholders to take no action while it assesses the offer. IAG confirmed the higher offer in a separate statement. It said the proposal is "subject to certain pre-conditions," without giving details. "There can be no certainty that any further proposal or offer will be forthcoming," it added. IAG shares climbed 3.5% in London to 555 pence, while Aer Lingus was up 1.5% by early afternoon in Dublin at just below €2.39. That gives Aer Lingus a market capitalization of around €1.27 billion. IAG offered €2.30 a share in mid-December and then €2.40 a share two weeks later. London-based IAG, led by Irish-born CEO Willie Walsh, was created from the 2011 merger of British Airways and Spain's Iberia. Walsh is a former CEO of Aer Lingus, where he started flying planes at age 17. A takeover of Aer Lingus would require approval from the target's largest shareholder, 29.82% owner Ryanair Holdings plc, which has tried several times without success for a full takeover. The Irish government holds 25.11% of Aer Lingus and is facing pressure from opposition politicans to reject the IAG offer. The Impact trade union, which represents Aer Lingus cabin crew, pilots and some ground staff, has also voiced its concerns about the merger. In a letter to Irish Transport Minister Paschal Donohoe last week, Impact's national secretary, Matt Stanton, wrote that the proposed takeover risks damaging Irish interests, including accessibility to Ireland for business and tourism. "It also represents a significant risk to the security of employment for Irish workers employed directly or indirectly by Aer Lingues," Stanton wrote. Aer Lingus' 23 take-off and landing slots at London's crowded Heathrow airport may be part of the attraction for IAG, which purchased British Midland from Deutsche Lufthansa AG in 2012. Aer Lingus left the BA-led OneWorld alliance in March 2007 to restructure and pursue code shares with more carriers. Donohoe said in a television interview on Sunday his government will consider issues such as keeping the Aer Lingus slots at Heathrow. Aer Lingus, whose CEO Christophe Mueller is due to step down in May, earlier this month said its full-year operating profit before exceptional items would be ahead of the 2013 result of €61.1 million. Aer Lingus is taking advice from Anthony Gutman, Eduard van Wyk and Nick Harper at Goldman Sachs International.

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