Shares in Aer Lingus rose sharply in early trading on the Dublin Stock Exchange on Wednesday morning – after Ryanair boss Michael O’Leary made a bid to buy Ireland’s national airline.

Budget carrier boss O’Leary has offered a near one billion dollar cheque for the shares in Aer Lingus not already owned by Ryanair.

The new offer places the $1billion valuation  on Aer Lingus with O’Leary even claiming the sale would help the Irish government meet some of the conditions of the EU bail-out.

The surprise cash offer was made just 24 hours after Britain’s competition commission began a full investigation into Ryanair’s 29.8% holding in Aer Lingus according to the Irish Examiner.

The paper reports that Ryanair has offered €1.30 per share, slightly less than the €1.40 per share offered in a 2008 takeover bid.

Making the offer, Ryanair chief executive O’Leary said it represents good value for Aer Lingus’s shareholders and would keep the airline Irish.

“We believe that Ryanair’s offer of €1.30 now offers Aer Lingus’s long-suffering shareholders a real and meaningful return which represents a 38.3% premium to its closing price of €0.94 on Tuesday, 19 June, 2012,” said O’Leary.

“It allows the Irish Government to deliver the first of its assets sale obligations to the troika, and it enables Aer Lingus to secure a financially strong, Irish-based, airline partner committed to keeping Aer Lingus as a separate airline while developing the Aer Lingus brand and business.”

An Aer Lingus spokesman acknowledged the offer but said the carrier would not be making any comment.

The new bid will be scrutinised by the European Commission which has already investigated a 2007 Ryanair bid for Aer Lingus and decided to block it in Jun 2007.

O’Leary says Ryanair is willing to address any concerns held by the commission prior to completing a bid.

“The increase in capacity at Dublin Airport, the consolidation of airlines across Europe, and the

Government’s commitment to the troika to sell its stake in Aer Lingus have resulted in a different set of circumstances,” said a Ryanair statement.

“The most significant development was the consolidation of the two largest airlines operating out of Heathrow. The green light for IAG’s (BA and Iberia) takeover of BMI paves the way for Ryanair to attempt a similar move in acquiring Aer Lingus.”

Shares in Aer Lingus rose on Wednesday morning but NCB Stockbrokers analyst Brian Devine told the Irish Examiner that the takeover deal is unlikely to be approved.

“It is very hard to see how it would be accepted by European competition authorities,” said Devine.

Ireland’s Transport Minister Leo Varadkar said his Government would have to study the offer before making any comment.

Fianna Fáil transport spokesman Timmy Dooley said his party is opposed to the Ryanair bid and urged the Government to prevent it.

“The existence of Ryanair and Aer Lingus as separate competing entities has transformed our tourism and business connectivity,” said Dooley.

“Any material change to the separate status of these airlines would inevitably lead to reduced competition, increased fares and less choice.”

Ryanair Holdings to 29% stake in Aer Lingus in the event of an “agreed takeover” of the Irish airlineMartin Keene/PA