The board of Aer Lingus has indicated to International Airlines Group that the financial terms of a propped takeover are at a level at which it would be willing to recommend it to Aer Lingus shareholders.
IAG yesterday confirmed it had submitted an improved proposal to make an offer for Aer Lingus, valuing the company at €1.36 billion.
The proposal consists of an offer of €2.55 per share, structured as a cash payment of €2.50 per share, payable upon completion, in addition to an ordinary dividend of €0.05 per share.
The deal is subject to being satisfied with the manner in which IAG proposes to address the interests of relevant parties.
Accordingly the Board of Aer Lingus has granted IAG access to perform a limited period of confirmatory due diligence.
It is IAG’s intention that under its ownership, Aer Lingus would operate as a separate business with its own brand, management and operations, continuing to provide connectivity to Ireland, while benefiting from the scale of being part of the larger group.
IAG – which also owns British Airways, Iberia and low-cost carrier Veuling – said it would expect Aer Lingus to join the oneworld alliance.
BA and Iberia are both already in the airline alliance.
Aer Lingus would also join the joint business that IAG operates over the North Atlantic with American Airlines, leveraging the natural traffic flows between Ireland and the US and the advantageous geographical position of Dublin for serving connecting flows.
“IAG believes that the proposal would secure and strengthen Aer Lingus’s brand and long term future within a successful and profitable European airline group, offering significant benefits to both Aer Lingus and its customers,” IAG said in a statement.
“IAG recognises the importance of direct air services and air route connectivity for investment and tourism in Ireland and intends to engage with the Irish Government in order to secure its support for the transaction.”