Aer Lingus said today Ryanair’s hostile bid for the company was “diversionary and fatally flawed” and that the rival airline had failed to show any new remedies that would enable it secure competition approval from the EU.
The former State airline insisted it had “unmatched financial strength” and that Ryanair could not secure approval from the European Commission for such a takeover, on competition grounds.
Ryanair earlier said it would be willing to raise its offer for Aer Lingus but would not wage a prolonged battle if shareholders continued to oppose the deal.
Ryanair chief executive Michael O'Leary told reporters today he would be willing to increase his offer price of €1.40 a share, equivalent to about €750 million. However, in a statement, Ryanair ruled out raising the price to €2 or above. A spokeswoman for Ryanair declined to comment further.
In its own statement this evening, Aer Lingus noted Ryanair’s announcement that it would not proceed with a ‘phase II’ review of its offer without significant support from Aer Lingus shareholders, including the acceptances of the Irish Government or the employee share trust.
“Aer Lingus continues to believe that the offer is diversionary and fatally flawed. Ryanair has not disclosed any new remedies to Aer Lingus shareholders nor provided any new evidence that clearance could be achieved.
“Ryanair has failed to disclose to Aer Lingus shareholders the nature of any new remedies that it believes will enable it to secure competition approval from the European Commission. We believe this failure is unacceptable in the context of a bid that seeks to overturn a recent prohibition [by the commission].”
Aer Lingus said it believed Ryanair had attempted to divert the attention of Aer Lingus shareholders away from the central issues of the offer.
“In particular, Aer Lingus believes that Ryanair has not faced up to the realities in relation to its ability to achieve approval from the European Commission for a merger of Aer Lingus and Ryanair.
“In June 2007 the European Commission prohibited the merger of Aer Lingus and Ryanair, as the combination would have created a monopoly or dominant position on 35 routes.
“The commission did not accept that Ryanair’s remedy proposals would allow for competition to be achieved. Today, a combination of Aer Lingus and Ryanair would be even more dominant with the number of monopoly and overlapping routes increasing since June 2007.”
Aer Lingus chairman Colm Barrington would write to the chairman of Ryanair, David Bonderman, requesting that Ryanair provide to all Aer Lingus shareholders “the full details of the remedies that Ryanair has discussed with the European Commission or those remedies it believes will enable it to secure commission approval”.
“Without transparency on this matter, Aer Lingus shareholders may conclude that the offer is incapable of completion. Aer Lingus expects that Ryanair will respond positively to this invitation if Ryanair truly wishes to demonstrate its offer is capable of completion,” the statement added.
Aer Lingus said its shareholders should not be distracted by Ryanair’s claim that European airline consolidation was inevitable.
“In the past five years the only consolidations of any comparable size that has taken place has involved failing airlines such as Alitalia, Austrian Airlines and Swiss. Aer Lingus clearly does not fall into this category.
“Aer Lingus has unmatched financial strength, with one of the highest net cash balances and the best liquidity of all major European airlines.”
Additional reporting: Reuters