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Aer Lingus calls on investors to reject Ryanair takeover bid


The takeover battle is expected to last into next year

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Irish flag carrier Aer Lingus asked shareholders on Friday to reject rival Ryanair’s €700 million (£554.87 million) takeover offer in what is expected to be a protracted battle.

Ryanair promised to offer EU competition authorities, which neither airlines expects to approve the bid by Wednesday decision date, "radical remedies" to address competition concerns, but Aer Lingus said the bid was doomed to fail.

"Ryanair's offer is not in the interests of shareholders, fundamentally undervalues the business and is likely once more to be prohibited by the European Commission," Aer Lingus said in a statement to shareholders published on Friday.

"The board re-affirms its recommendation that shareholders should reject the offer," it said.

Instead they expect it to move to a longer Phase II process that can last up to 105 working days, which would push a resolution into 2013.

Aer Lingus' shares have gained 14 euro cent to 1.08 since Ryanair announced its bid in June, but remain 22 cents short of the offer price, implying that many traders are yet to be convinced that the bid will be successful.

The European Commission, which acts as EU competition watchdog, is among the biggest impediments to a deal which was announced in June and is Ryanair's third attempt to take over the former state carrier.

The EU executive blocked Ryanair's 2007 attempted takeover of Aer Lingus, saying the combined group would monopolise or dominate 35 routes, leading to consumers paying more. It said Ryanair had not offered to give up enough airport slots to allay its concerns.

Ryanair, which already owns 30 percent of Aer Lingus, dropped its second offer in 2009.

In its statement, Aer Lingus said the EC would likely reject the takeover bid, something it can only do after a Phase II probe.

Ryanair CEO Michael O'Leary told journalists in Madrid on Thursday he expected the EC to move to Phase II but said he would offer unspecified remedies to allay competition concerns.

READ ALSO:

CFO Interview with Aer Lingus CFO Andrew Macfarlane

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Aer Lingus calls on investors to reject Ryanair takeover bid
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