Ryanair Reveals Details Of Euro 1.48B Aer Lingus Bid

Calls For The Board To Recuse Itself

On Monday Ryanair revealed the details of its plans for a hostile takeover of rivals Aer Lingus, releasing a 125-page document that outlined the offer to shareholders in the airline.

The report told shareholders that they should decide to accept or decline the offer by November and bluntly informed them that they would lose money if they rejected it.

Ryanair made their initial offer of Euro 2.80 per share on October 5th, less than a week after the Irish government had divested its majority stock holding in the airline in an IPO which valued the shares at three-quarters of that price.

Pointing out that Ryanair's previous bidding for Aer Lingus stock had driven their price up, company chief executive Michael O'Leary told shareholders that should the deal be rejected, they should probably expect to see their shares value decline.

Should they not choose to accept the bid, Aer Lingus would be left "as a small regional airline in a competitive market with a high fare structure and an uncompetitive cost base."

Pointing out the benefits of a merger, Mr. O'Leary said that that Aer Lingus would benefit from his airline's "buying power," noting that it had recently announced a deal with Boeing for the purchase of 32 new aircraft - four more than Aer Lingus' entire short-haul fleet.

He also emphasised the advantages to Aer Lingus, which carried 8 million passengers last year, of access to Ryanair's 42.5 million in the same period and said that: "We believe it's a unique opportunity to put the two leading Irish airlines together into one strong group that would be able to compete with Europe and the world."

The Irish government have maintained that the bid will fail, Taoiseach Bertie Ahern maintaining that it will be maintaining its current stake in the airline and warned that the reduction in competition that would result from the merger would be detrimental to Ireland's economic competitiveness.

Aer Lingus' board have already rejected Ryanair's overtures but the Chairman John Sharman released a statement after the details of the offer were disclosed telling shareholders that the bid was "without merit"

"The offer also ignores the significant regulatory issues that a combination would face," he continued.

"A takeover by Ryanair, no matter how it is dressed up, would be bad for Aer Lingus, for its shareholders, for its employees and for consumers.

"The board of Aer Lingus, which has already rejected the offer, will formally respond in detail when it issues its response setting out the views of the participating directors on the offer within the next fourteen days."

"In the meantime, Aer Lingus shareholders are strongly urged to take no action."

Together with the government and the Aer Lingus board, the Aer Lingus pilots pension fund, which owns 2.5% of the company, and telecoms tycoon Denis O'Brien, who recently acquired 2.1%, are also known to be hostile to the bid.

Ryanair is expected to increase its stake to at least 50% which would leave the deciding vote in the hands of the Employee Share Ownership Trust, which holds 11% of the stock in the name of both current and former employees.

In a late twist on Monday, Ryanair responded to Mr Sharman's remarks by demanding that the entire Aer Lingus board recuse themselves from consideration of the offer.

Citing the Minister of Transport's public remarks against the bid, the budget airline pointed out that since all the board members were appointed by the Minister, "It is not appropriate [them] to decide what is in the best interest of the company and its shareholders, as they are also conflicted and therefore should recuse themselves."