The nine-year battle for control of the Irish flag carrier Aer Lingus ended yesterday as its great rival Ryanair finally said it would accept IAG’s €1.4bn (£1bn) takeover bid and sell it its 29.8 per cent stake.
The capitulation marks a victory for Willie Walsh, chief executive of the British Airways owner, who began his career as an Aer Lingus pilot, over Michael O’Leary, the freewheeling chief of Ryanair who himself tried three times to take over Aer Lingus.
For a man who has made a career out of lambasting BA, Mr O’Leary made was magnanimous yesterday, saying: “We wish IAG well with their takeover of Aer Lingus. We believe the IAG offer is a reasonable one in the current market. The price means that Ryanair will make a small profit on its investment.”
Ryanair held the final key in the takeover negotiations with its stake, which it could have used to block the bid. But that became less and less likely after the Irish Government said it would vote its 25 per cent stake in favour of IAG and the UK Competition and Markets Authority refused to back down on its ruling that Ryanair should cut its stake to 5 per cent.
IAG said it “welcomed Ryanair’s statement”. But behind the scenes Mr Walsh and his team were celebrating a victory that adds punch to the BA, Iberia and Vueling routes to the US and grants a dominant position on one of the world’s busiest routes, between London and Dublin.
Ryanair said it would back the takeover at next Thursday’s meeting of Aer Lingus shareholders. It will also vote for the creation of a golden share owned by the Irish Government, which will hold veto rights over Aer Lingus’s 23 daily flights between Heathrow and Ireland. This will stop IAG transferring these valuable slots to other routes, and was one of Mr Walsh’s concessions to secure backing for the bid.
Ryanair launched its first €1.5bn takeover bid for Aer Lingus in October 2006. That was barred by the European Commission but, undeterred and in a much bleaker economic climate, Mr O’Leary came back with a €750m offer in December 2008. That too was rejected by the Irish Government. The third and final bid of €694m came and went in 2012.
IAG started its bid last year and raised it three times, from €2.30 to €2.55 a share, before it won Ireland’s backing.
Mr O’Leary could not resist a final dig at his rival, saying: “When Ryanair first bid for Aer Lingus in late 2006, Ryanair [36 million passengers] carried four times’ Aer Lingus traffic [9 million]. Today Ryanair [over 100 million] carries more than 10 times’ Aer Lingus traffic, and we will continue to deliver the vast majority of Ireland’s traffic and tourism growth.”
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