Irish Takeover
December 1, 2008
Ryanair said in a statement that it was offering 1.40 euros ($1.78) per share to take a 100 percent stake in Aer Lingus. The deal would put the airline's value at around 748 million euros.
Ryanair claimed the offer would be worth 325 million euros in cash to shareholders, employees and the Irish government, which owns just over 25 percent of the airline.
The offer "will lead to one strong Irish airline group, lower fares for customers, rapid fleet growth and 1,000 new jobs in Aer Lingus," said the statement released Monday, Dec. 1.
Takeover 'right' for Ireland
Ryanair chief executive Michael O'Leary told US news channel CNBC that the global financial crisis justified creating a stronger Irish carrier.
"We feel we should put the two airlines together to make a strong national champion," O'Leary said, adding that the Irish government has said it would take similar action to help banks manage the global financial crisis. "It is a sensible strategy for Ireland ... Ireland has changed."
He added that only a merged airline would be able to compete with large European carriers such as Germany's Lufthansa and French-Dutch airline Air France-KLM.
O'Leary said Ryanair would double the size of Aer Lingus' short-haul fleet from 33 to 66 aircraft over the next five years, which would create jobs.
Try, try again
But Ryanair's offer could yet face considerable obstacles. The European Commission rejected a Ryanair takeover of Aer Lingus in September 2006, insisting the deal was not in the spirit of competition.
The original takeover bid also failed to get the backing of the Irish government, which had just floated the airline at the time.
The 2006 offer is still under appeal at the European Court of First Instance.
Ryanair is a major shareholder in Aer Lingus with a 29.8 percent stake in the company.
Aer Lingus reported a loss of 22.3 million euros for the first six months of 2008, down from a profit of 2.6 million euros for the same period for 2007. The airline said the loss was due in part to the rising cost of fuel.