Aer Lingus rejects Ryanair offer

The Aer Lingus board has unanimously recommended that shareholders reject Ryanair's offer for the airline, reiterating its view that the bid undervalues the business.

The airline has been opposed to the takeover by its larger rival from the start, and wrote to shareholders at the end of last month to recommend they reject the bid.

In a statement today, Aer Lingus said shareholders should take no action in relation to the offer and should not sign any document sent by Ryanair or its advisers.

"Based on careful consideration of the issues, and extensive legal and financial advice, the board remains of the view that Ryanair's offer is not in the interests of shareholders, fundamentally undervalues the business and, due to the scale and extent of competition issues, is likely once more to be prohibited by the European Commission," it said.

Ryanair last month submitted a formal bid for Aer Lingus of €694 million. The airline, which already owns 29.8 per cent of its rival, has offered to pay €1.30 a share in cash for the remaining stock.

Aer Lingus has dismissed the offer as not credible, as its legal advice was that it was unlikely the new bid would get approval at a European level. The airline is expecting a preliminary decision from the European Commission in the coming weeks.

Ryanair is also facing a full investigation by the UK's Competition Commission of its holding in the smaller carrier.