Irish airline Aer Lingus announced on Tuesday that it will likely be sold for $1.57 billion (€1.4 billion) to International Airlines Group (IAG), the owner of British Airways.
Following two previous attempts by IAG to buy Aer Lingus, the airline is accepting a raised offer of $2.89 per share (up from $2.73) including a cash offer of $2.84 per share and a dividend of $0.06.
IAG is headed by Willie Walsh, who began as an Aer Lingus pilot before running the airline between 2001-2005. IAG was created in 2009 through the merger of British Airways and Spanish airline Iberia, and is headquartered in London.
Aer Lingus’s two main shareholders are rival Irish airline Ryanair (29.8% stake) and the Irish government (25.1% stake). The sale will have to be agreed by the shareholders and will also need regulatory approval before closing.
"Having considered this request, the Board has indicated to IAG that the financial terms are at a level at which it would be willing to recommend, subject to being satisfied with the manner in which IAG proposes to address the interests of relevant parties," Aer Lingus said.
"The Board notes IAG's intentions regarding the future of the company, in particular that Aer Lingus would operate as a separate business with its own brand, management and operations, continuing to provide connectivity to Ireland, while benefiting from the scale of being part of the larger IAG group."
Ryanair’s chief of marketing Kenny Jacobs has said that the airline “isn’t bothered” by IAG’s offer.
Transport Minister Paschal Donohoe said he would “very, very carefully” evaluate the sale after warnings from unions that jobs could be lost as well as concerns that air connections will vanish.
The government has concerns that a private owner could weaken travel connections for Ireland.
The Aer Lingus board said IAG executives offered assurances that Aer Lingus would remain "a separate business with its own brand, management and operations, continuing to provide connectivity to Ireland." David Holohan of Merrion Stockbrokers said these assurances should assuage these concerns and others.
IAG said it intended to talk directly with Irish government leaders to explain that their plan "would secure and strengthen Aer Lingus's brand and long-term future."
"IAG has outlined plans for Aer Lingus which we believe are logical, attractive and will likely alleviate the concerns of the Irish government. Our view is that this news paves the way for the Irish government to support the deal," Holohan said.
IAG said Ireland’s location means it is well positioned to handle more long-haul flights between the US and Europe, and that Aer Lingus would benefit from increased cooperation with American Airlines, IAG's main U.S. partner.
Senior executives at Aer Lingus will earn around $34 million from their bonus share scheme from the sale.
Interested in a job in finance? Search for roles in Ireland now