Irish carrier Aer Lingus is considering a fresh takeover bid from British Airways owner International Airlines Group (IAG).
The company has previously rejected the advances of IAG with the latest bid being turned down in late December. However, the Aer Lingus board is set to consider a new bid of €1.36 billion (£1 billion) equating to €2.55 a share. The deal is a long way from completion as both the Irish government and Ryanair need to approve it.
Ryanair currently holds a 29.8 per cent stake in Aer Lingus, while the government owns 25 per cent. The low cost airline itself has previously tried to take over the Irish flag carrier airline but this was subsequently rejected. This has gone alongside two failed bids from IAG to purchase the company in the past year.
IAG is eager to take control of Aer Lingus to increase its presence at Heathrow Airport. The Irish carrier is currently the fourth-largest operator at the UK's airport with only British Airways, Lufthansa and Virgin Atlantic boasting more flights. IAG's interest comes from Aer Lingus' desirable take-off and landing slots at Heathrow.
The Irish carrier has 23 pairs of these slots, valued at around £30 million each, and should IAG gain control of Aer Lingus it will allow it the opportunity to operate more flights every day. Despite strong suggestions that the deal will go through, opposition Irish MPs have called for a shelving of the deal.
There is a concern that IAG's takeover could potentially lead to Ireland losing some key connections between itself and Heathrow. Members of the Irish cabinet are set to meet on Tuesday (January 27th) to discuss the issue.
News of the potential takeover provided stimulus to Aer Lingus' share price which was up 0.42 per cent as of 08:50 GMT on Monday (January 26th).
Find up to date information on the FTSE 100 and spread betting strategies at City Index.
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.