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IAG and LH agree sale of British Midland Airlines Ltd; BD 'to exit *A on completion'

IAG and LH agree sale of British Midland Airlines Ltd; BD 'to exit *A on completion'

Old Dec 11, 11, 11:54 pm
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IAG and LH agree sale of British Midland Airlines Ltd; BD 'to exit *A on completion'

Mod Edit:
This thread is a continuation of the pre-existing http://www.flyertalk.com/forum/bmi-d...dland-ltd.html
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From the Times today- Virgin has started due diligence for a quick acquisition of BD.
http://www.thetimes.co.uk/tto/busine...cle3255237.ece

Last edited by GoldCircle; Dec 13, 11 at 2:38 am
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Old Dec 11, 11, 11:55 pm
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The Times today reports a few points, primarily that Virgin is a serious bidder and has signed a "terms of agreement" so that they can look at BD's books. Apparently the BA bid is about £100m and Virgin is offering £50m - but with no chance of it being challenged through the courts or by regulators. Those figures exclude restructuring/pension costs. Lufthansa didn't comment on the story.

So, you never know, perhaps those people buying BD miles as cheap versions of Avios will wish to rethink their strategy
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Old Dec 12, 11, 12:31 am
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Originally Posted by Tyrolean View Post
Remember when LX wanted to join Oneworld? It was announced even on the Oneworld homepage. If IAG is doing the due diligence nothing is sure for now.

I really believe it when it really happens!
Exactly, the one thing we should never underestimate is BA's ability to snatch defeat from the jaws of victory. Remember the number of times BA nearly got to the altar with KL before finally sending them running to seek consolation with AF? Remember how OW nearly ended up with LX and a hub in the middle of Europe rather than on the edge, but then BA managed to drive them into the waiting arms of LH? Even the IAG deal was stalled and messed around for a long time, I suspect in the end it only went through because of the lack of any other suitor for IB. Yesterday I would have said the BD acquisition was 99% certain to close, today, even though VS have put in a lower bid, I would think it is closer to 75% and IAG could still lose it.
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Old Dec 12, 11, 12:38 am
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*lufthansa says virgin atlantic makes rival bid for bmi unit
*lufthansa says iag and virgin atlantic bids have equal chance
*lufthansa says virgin atlantic doing due diligence on bmi
*lufthansa spokeswoman claudia lange spoke in phone interview
*lufthansa says hopes to finalize bmi sale by end of q1
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Old Dec 12, 11, 1:23 am
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But why hasn't Virgin bought this "serious" offer to the table earlier?

The reports do not indicate anything that I can see that would have prevented Virgin making this offer some time ago in order to "study the books". If the current indications are correct they have made a safe "stake" offer that allows them to seem to play but seems insufficient to yet prove to be a satisfactory deal-making bid. So far nothing has been spent, and nothing is at risk.

So, is it simply a "spoiler" ie at no cost at all it enhances Virgin's own repuation and possibly pushes the cost up for IAG? It also is to the benefit of LH as it assists LH by providing additiona leverage in it's discussions with IAG is it has been up to now has been a one-horse race?

There's nothing I can see that would have prevented Virgin tabling this offer earlier and it needed to see the books before now if it were serious about optimising the deal.

Too many unexplained oddities so it may be a serious bid, but at the moment I'd still not put money on it.
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Old Dec 12, 11, 2:20 am
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SRB is in a good position here. Every extra 2 days LH have BD it costs them about 1 million pounds.

So, if IAG say 100 million and have to await regulatory approval then if that takes more then 200 days then that 100 million is just used to soak up the additional losses incurred.

However, if SRB says, here is 50 million and the deal is done in next to no time then LH might actually see some of the VS 50 million.

Assuming he is serious then he has actually put himself in a very good position here IMO.
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Old Dec 12, 11, 2:23 am
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Alternatively the due dilligence that IAG did may have uncovered a few skeletons in the Hall's dungeon that WW doesn't want... @:-)
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Old Dec 12, 11, 2:26 am
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Originally Posted by uk1 View Post
But why hasn't Virgin bought this "serious" offer to the table earlier?
.
I believe the offer has been on the table the whole time - afterall VS did say they had placed a bid. Presumably as they dont have to announce everything as a publicly listed company does it hasnt all come out.

Now that it may be getting serious LH has to make an announcement.

IAG were saying as far away as 2 weeks ago that they were not the only bidder in the process so I think this is old news made public.
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Old Dec 12, 11, 3:11 am
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WPS has informed all staff via memo today regarding the VS offer. Same terms as IAG.
Lufthansa plans to sign a definitive sales purchase agreement with one of these parties in the coming weeks and completion is envisaged for the first quarter of 2012
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Old Dec 12, 11, 3:42 am
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Did I read somewhere, possibly here, that part of the VS deal was them joining *A or noise to that effect?
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Old Dec 12, 11, 3:59 am
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Virgin were seeking support from a financial backer, supposedly middle eastern; perhaps they've now been able to secure funding.
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Old Dec 12, 11, 4:48 am
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I can't open this without paying Murdoch some money.

Here's an alternative:
Virgin makes rival bid for BMI

Virgin Atlantic has confirmed that it has signed a terms and conditions contract with Lufthansa over the sale of BMI.

Virgin said it is now in negotiations with Lufthansa over the next stage of the purchase.

...

According to reports in the financial press, Virgin's offer is lower than IAG's but it is relying on the fact that any deal is likely to be completed more quickly as it would not be open to so much scrutiny from competition authorities ...
http://www.travelmole.com/news_featu...ews_id=1150626
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Old Dec 12, 11, 4:56 am
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An interesting sideline to this is that VS could get instant *A membership (whether or not the other *A airlines wanted them!), if the deal was structured as a reverse takeover of VS by BD. That in itself would be worth a decent chunk of the takeover cost. There may also be other savings to LH if it is under pressure from inside *A (if BA gets BMI) to offer a status match or miles transfer.

And it would make my 1m VS miles (which is what I would presumably end up with) be worth having ...!

Lots of other upside here as well, eg being able to put Tesco into a *A airline.
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Old Dec 12, 11, 5:09 am
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Originally Posted by Raffles View Post
Lots of other upside here as well, eg being able to put Tesco into a *A airline.
You're gonna have to explain that, please... It's lost on me. What's Tesco got to do with *A???
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Old Dec 12, 11, 5:24 am
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Raffle's is referring to Tesco Clubcard points.
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