Aer Lingus chairman Colm Barrington asked shareholders today to reject Ryanair’s offer of $852 million, or €694 million, to purchase the 71 percent share of Aer Lingus it does not already hold, Dealbook for the New York Times reported.
Barrington reminded investors that the European Commision denied Ryanair’s previous bids for control of Aer Lingus on the grounds that the buy would leave a single group in control of over 70 percent of the Irish air travel market, Dealbook wrote.
Ryanair has indicated its willingness to give up some of Aer Lingus’ slots at Heathrow in order to avoid the monopoly concerns, but Barrington said the loss of the slots would hinder Aer Lingus’ future.
Competition regulators in Britain are already examining whether the present 29.8 percent Ryanair share in Aer Lingus itself gives Ryanair too much sway over the Aer Lingus business plan, and thus the Irish air market.
“Your board has received legal advice that the European Commision is likely once more to prohibit the Ryanair offer as the number of routes into and out of Ireland that Ryanair would monopolize has sharply increased,” Barrington wrote in the thirty-page circular to shareholders, referring to Ryanair’s failed 2008 bid for control.
Barrington also said that Ryanair’s offer of 1.30 euros a share—already 38 percent over Aer Lingus’ current share price—undervalued Aer Lingus in the context of its recent performance. Ryanair’s current bid is less than half of what it offered for Aer Lingus in 2006.
Aer Lingus acknowledged Tuesday that compared with the same period last year, its pretax profit April through June fell 73 percent. Afternoon trading in London Tuesday saw Aer Lingus share price climb 1.4 percent, Dealbook reported.
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