RYANAIR HAS accepted defeat in its latest bid for Aer Lingus after the Government rejected its €748 million offer for the airline.
“We will respect and abide by the Government’s decision,” Ryanair’s chief executive Michael O’Leary said last night. “We are delighted to get the decision now rather than in three weeks’ time.”
Minister for Transport Noel Dempsey said the Government, which owns 25.12 per cent of Aer Lingus, had decided that the €1.40-a-share offer from Ryanair “greatly undervalued” Aer Lingus.
It also felt a merger would not be in the interests of consumers in Ireland and would go against its stated airports policy.
Mr Dempsey said: “We would have ended up in a situation where you would have virtually one airline operating out of Ireland and that would not be good from a consumer point of view.
“The offer was also about half the value of the company [Aer Lingus].”
While recognising that Ryanair had made certain guarantees in relation to the Heathrow slots, fare pricing and how Aer Lingus would be run separately, the Minister said Mr O’Leary had failed to provide remedies to how competition issues might be resolved.
“I didn’t see them anywhere saying anything about competition issues,” he added.
Mr Dempsey said he would like to see Aer Lingus forge more strategic alliances with other airlines, similar to the one announced yesterday with United Airlines to operate a service between Washington and Madrid from the spring of 2010.
“Aer Lingus has to look to strategic partnerships,” he said. “They have to look to expand rather than go into a defensive mode.”
However he declined to be drawn on how it might get Ryanair off its shareholder register.
“They will have to deal with that themselves,” he said. “I won’t comment on it one way or the other.”
Mr O’Leary declined to be drawn on why he had not increased his offer for Aer Lingus after it became clear that shareholders were unlikely to accept his original bid.
“There’s no point in speculating about it. We were quite clear from the start that it was a very good offer.”
He said Ryanair would continue to be a shareholder in Aer Lingus, in spite of failing with two bids for its rival. “We have no plans to dispose of it [its 29.8 per cent stake].”
Aer Lingus declined to comment yesterday as the offer had not formally lapsed. The deadline for acceptances for Ryanair’s bid is February 13th but the airline is expected to seek approval from the Irish Takeover Panel to withdraw its offer.
Aer Lingus’s share price fell by 10 per cent in Dublin after the Government’s announcement. The shares traded down to €1.25, having opened at €1.42.
Mr O’Leary predicted that the share price would continue to decline. “Watch them go below €1, it won’t take too long.”
