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Ryanair's hostile takeover bid for Aer Lingus drives both shares higher

Ryanair's hostile takeover bid for Aer Lingus drives both shares higher

Shares in both Ryanair Holdings PLC and Aer Lingus Group PLC rose Friday as investors gambled that Ryanair's hostile takeover bid for its Irish rival would produce a higher offer.
Aer Lingus shares closed 2.8 percent higher at euro2.98 (US$3.76) _ a 35 percent premium to the airline's euro2.20 IPO price Sept. 27, and 6 percent above Ryanair's euro2.80-per-share offer Thursday that stunned the Irish government, investors and Aer Lingus chiefs.
Ryanair said it had acquired 19.2 percent of Aer Lingus shares as of Thursday night. Ryanair was excluded from Friday's dealing because, under terms of takeover law, it cannot buy shares priced over its offer price of euro2.80.
Analysts agree that Ryanair, which has rapidly expanded across Europe but never mounted such an ambitious takeover bid before, certainly could afford to raise its offer, because it has cash reserves exceeding euro2 billion (US$2.6 billion).
While analysts are divided on the merits of acquiring Aer Lingus for Ryanair, shares in Europe's leading no-frills carrier also rose 1.5 percent Friday to close at euro8.80 (US$11.09).
The government, which sold most of its holding in the previously state-owned carrier to give it the freedom to grow, insists it will retain a minimum 25.1 percent stake _ the minimum required to block any attempt by a majority owner to have the company de-listed from stock markets. Ryanair CEO Michael O'Leary says he wouldn't mind having the government as a minority holder, because Ryanair's bid requires only 50.1 percent share ownership to take control.
However, regulatory hurdles loom both in Ireland and at the European Commission. Analysts say competition authorities probably would order both airlines to surrender lucrative slots at Dublin airport to British no-frills competitors, which currently have found it impossible to crack the Republic of Ireland market. Also likely to be relinquished would be slots at Ryanair's main London base, Stansted, and Aer Lingus' main London hub, Heathrow.
CEO Dermot Mannion, who broke off a holiday in the United States to return to Dublin, said Friday he was certain that the Ryanair bid would fail and Aer Lingus would remain independent. He said most major institutional investors, who bought about 40 percent of the IPO shares last week, would want to keep their money in an independent Aer Lingus and not cash in for a good, quick profit.
"We're not concerned. ... Those investors we believe are going to stay with us because they like the Aer Lingus value proposition," he told Ireland's state broadcasters, RTE.
Mannion rejected Irish media reports that Aer Lingus would welcome a rival "white knight" bid from another airline, particularly British Airways PLC, which is run by Aer Lingus' former chief executive, Willie Walsh.
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On the Net:
http://www.flyaerlingus.com
http://www.ryanair.com


Updated : 2021-07-27 10:37 GMT+08:00