Ryanair will not raise its offer for Aer Lingus, the budget airline has confirmed, in a move that seems likely to put an end to its hostile takeover attempt for at least a year.
Chief executive Michael O'Leary said in a letter to Aer Lingus shareholders he did not believe the strategy being pursued by Aer Lingus management could deliver a share price for the former state airline above Ryanair's €2.80 per share bid, which values the company at €1.48 billion.
"Accordingly, Ryanair confirms that it will not increase its offer of €2.80 per Aer Lingus share," Mr O'Leary said in the letter posted today.
His comments knocked Aer Lingus's shares to their lowest level since the bid was announced. They lost 2.1 per cent to close at €2.68 on the Irish Stock Exchange.
Ryanair has faced intense opposition to its bid and is not expected to get enough shareholders to accept the existing offer to give it the 50.1 per cent controlling stake it seeks. It currently holds 19.2 per cent of the shares in the national airline.
Last week it extended to December 4th the period for shareholders to accept its bid after holders with less than 0.1 per cent of shares in Aer Lingus accepted by the original November 13th deadline.
The Government, Aer Lingus's largest shareholder with 25 per cent, has already said it will not accept the offer and Mr O'Leary acknowledged earlier this month the bid was unlikely to succeed without the support of the third-largest stakeholder, the Aer Lingus Employee Share Ownership Trust (ESOT).
The ESOT holds a combined stake of 12.58 per cent and the result of its ballot on the offer is expected on Wednesday afternoon. Many analysts expect it to reject the offer.
Under takeover rules, Ryanair can raise its offer only if Aer Lingus receives a competing bid or if Aer Lingus management, which has rejected the offer, says it would be prepared to accept a higher bid.