A group of Aer Lingus pilots spent approximately €24 million yesterday buying shares in the airline as part of an attempt to block a takeover bid from Ryanair, writes Emmet Oliver
The shares were bought yesterday afternoon at a price of €3.05 in a transaction managed by Goodbody Stockbrokers, which are advising the airline. The purchase of 8.5 million shares is expected to be formally declared to the stock market today.
Traders familiar with yesterday's transaction - which will give the group a 1.6 per cent share of the airline's equity - said it was a defensive move against Ryanair, which last Thursday launched a €1.4 billion, or €2.80 per share, bid for Aer Lingus.
Ryanair currently holds a 19.2 per cent stake in the airline and wants to buy at least 50 per cent. The Aer Lingus pilots and other opponents of the takeover believe that if they can buy up enough additional shares they can stymie Ryanair.
The Government currently holds a 28 per cent stake, the Employee Share Ownership Trust (ESOT) and other staff control about 12 per cent and the remaining shares areheld by institutions. With the pilots, the ESOT and the Government holding almost 42 per cent of the company, it could prove difficult for Ryanair to reach 50 per cent based on its current offer.
There were also signs last night the ESOT may increase its stake, but it is finding it more difficult to secure funds. One option might be for the ESOT to put its existing shares up as collateral for a loan which could be used to purchase additional stock.
It was not clear how the pilots funded their purchase, but some sources suggested that funds from a pilots' pension scheme - The Irish Airline Pilots' Superannuation Fund - which is in surplus, may have been used.
Yesterday's deal was the second purchase by a group of pilots of shares in the airline in recent weeks. A group called Tailwind Nominees previously purchased about €20 million of shares, but may have sold some shares since the airline went public on October 2nd.
Dermot Mannion, Aer Lingus chief executive, has said the airline wants to remain an independent entity while John Sharman, the chairman, said: "This approach [by Ryanair] is unsolicited, wholly opportunistic and significantly undervalues the group's businesses and attractive longterm growth potential. In addition, the offer would raise significant regulatory issues as a result of Aer Lingus group's strong position in its core markets."
The airline is hoping the takeover will be blocked by the EU on competition grounds and has hired Goldman Sachs to put together its competition case. The US bank is able to call on expertise from two former EU competition commissioners, Mario Monti and Karel van Miert. Both act as international consultants to Goldman Sachs.
Many dealers in the Dublin and London markets now expect an improved offer to come from Ryanair, and the airline is this week canvassing support from its investor base. Some of its US investors have already expressed misgivings about the bid and they may be nervous about the airline offering a higher cash bid.
Ryanair yesterday said it was opening a second Spanish base in Madrid, in a move that will reassure investors that management, led by Michael O'Leary, is still focused on rolling out its low-cost model across Europe. The airline said it would invest $210 million in three new aircraft and 14 routes that would deliver one million passengers a year.