BusinessPolicyArticles01 - CORPORATE NEWS THE WALL STREET...

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. . CORPORATE NEWS . THE WALL STREET JOURNAL. Aer Lingus Rejects Ryanair Offer Bid of $950 Million, Half of Earlier Attempt, Is Dismissed as Underpriced Ryanair's chief, Michael O'Leary, says economic upheaval and consolidation should weigh in favor of his carrier's bid. Irish flag carrier Aer Lingus PLCrejected a renewed takeover bid from Irish rival Ryanair Hold- ings PLC,saying the offer was un- derpriced and unworkable. Ryanair, Europe's largest low- cost airline, launched a new €748 million ($950 million) bid for unprofitable Aer Lingus, just two years after Ryanair failed to acquire the carrier for about dou- ble that price. In its first attempt, Ryanair was unable to overcome support for Aer Lingus from the Irish gov- .g ernment, which owns 25.4% of ~ the airline, and other minority ~ stockholders including em- ~ ployee shareholders, who hold ~ about 14%of the stock. ~ The bid was also blocked by European Union regulators, al- though Ryanair appealed that de- cision. The new bid is likely to face many of the same issues with competition authorities. Ryanair Chief Executive Michael O'Leary said in an inter- view that economic upheaval and continuing consolidation in Europe's airline industry have now created a climate in which the Irish government, outside shareholders and EU regulators should approve this offer. "The world has changed" since 2006, Mr. O'Leary said. Ry- By Daniel Michaels, Quentin Fottrell and Kaveri Niththyananthan anair, which still holds 29.8% of Aer Lingus, now hopes to over- come EU opposition by appeal- ing to the Irish government. "We think what will be most influential to EU regulators will be the Irish government's atti- tude," Mr. O'Leary said. "Our fo- cus this week will be on persuad- ing the Irish government and Aer Lingus of the benefits of the deal," he said. The government said in a statement that Minister for Transport Noel Dempsey "will evaluate the proposal from the perspective of the government as a shareholder in Aer Lingus and having regard to Ireland's aviation policy." Aer Lingus said in a state- ment that its board felt the offer "significantly undervalues" the airline. It said competition is- sues mean the proposal "is not capable of completion" and urged shareholders to reject the bid and "take no action in rela- tion to the offer." A takeover of Aer Lingus would give Ryanair access to long-haul routes from London's popular Heathrow Airport and cement its position as one ofEu- rope's biggest international air- lines, alongside Air France- KLM SA, British Airways PLC and Germany's Deutsche Lufthansa AG. But it would also reduce com- petition on Irish routes, which was the reason regulators op- posed the deal two years ago. EU antitrust authorities then said the combination would give Ry- anair a monopoly on 22 routes and dominance on dozens more. Ireland's Impact trade union,
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This note was uploaded on 05/12/2010 for the course MAN 6721 taught by Professor Kraft during the Spring '10 term at University of Florida.

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BusinessPolicyArticles01 - CORPORATE NEWS THE WALL STREET...

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