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In Brief: British Airways Parent Company Purchases Aer Lingus for Over $1.5B
Jesse Tabit May 26, 2015
After months of deliberation and negotiation, British Airways’ parent company, International Airlines Group (IAG), has officially agreed to purchase Aer Lingus. The deal to acquire Ireland’s national airline, which totaled over $1.5 billion (€1.4 billion), was sealed in a meeting Tuesday.
“Acquiring Aer Lingus would add a fourth competitive, cost-effective airline to IAG, enabling us to develop our network using Dublin as a hub between the UK, continental Europe and North America, generating additional financial value for our shareholders,” IAG’s CEO Willie Walsh said of the deal.
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In Brief: British Airways Parent Company Purchases Aer Lingus for Over $1.5B
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Agree with the other two posters. They have the tentative agreement of the Irish government, who are the second biggest shareholder. This must be approved by the entire Irish parliament and then also, the primary shareholder, Ryanair must agree. Irish government approval was certainly the biggest hurdle to a sale but the sale is far from certain.
Correct me if I am wrong but currently (Wednesday 27th May) they don't have the agreement of the largest shareholder only the second largest. It's a bit premature to say the deal is done.
This story is factually incorrect. IAG has not "agreed" to buy - this would imply that they were requested to do so. IAG made a number of offers, the most recent having been on the table for the last several months. What happened yesterday was that, at a meeting of the Irish Cabinet, the government indicated its willingness to accept the offer. However, the topic must still be put to a vote in the Dáil, and it is not yet guaranteed that the vote would pass, as the junior party in the coalition has a number of very hesitant members who have campaigned strongly against any sale. Even when the Dáil votes to sell their stake, then there remains the problem of Ryanair. Ryanair holds almost 30% of Aer Lingus, and is the largest shareholder. They are currently appealing a decision of the UK Competition Commission which ruled last year that they must sell down their stake in Aer Lingus to below 5%. Ryanair have had 3 hostile takeover bids already rejected due to competition concerns. While this would seem an easy way for Ryanair to sell out completely - and make their money back - Ryanair has never been more profitable, so is in no immediate need of the money, and can therefore afford to indulge its belligerent streak, should it wish to make the sale complicated, given that its own plans for Aer Lingus have been thwarted at every turn.