Ryanair Withdraws $1.9 Billion Bid for Air Lingus
Ryanair Holdings said Thursday it is immediately withdrawing its offer to buy Aer Lingus after European Union regulators launched a probe into its hostile bid for the Irish carrier.
The no-frills carrier said its 1.48 billion euro (US$1.9 billion) offer was now void. It said it would only make another offer if the European Commission approved the proposed takeover.
Ryanair Chief Executive Michael O' Leary accused European Commission competition officials of bias against his airline. He noted that the same authority approved a deal between Air France and Dutch carrier KLM.
In that transaction, the parties offered to surrender 120 landing slots, O'Leary said. Ryanair offered as part of its bid to surrender more than 500 slots -- including slots currently belonging to Aer Lingus, he said.
"The commission appears to apply different and totally inconsistent principles to the Ryanair-Aer Lingus deal than it applied to the much larger Air France-KLM deal, which was waved through with little difficulty," O' Leary said.
Ryanair insisted that under European Union competition rules, it could no longer continue with its bid. However, the EU executive regularly launches four-month investigations into deals where it sees possible problems and a decision to do so does not require the bidding company to withdraw its bid during the investigation.
The European Commission said earlier Thursday that it saw "serious competition concerns" with the proposed deal to combine Ireland's two major airlines, saying it could reduce customer choice and lead to higher fares.
Ryanair and Aer Lingus have no other rivals on most routes out of Dublin and it was likely that the EU would have asked for more concessions before it could approve the combination. Regulators said solutions put forward by Ryanair in recent weeks did not go far enough to clear doubts about the deal.
Ryanair had put forward two plans to calm regulators' fears, but the commission said the first was "not sufficient" to remove its serious doubts while the second was handed in too close to the deadline to be properly assessed.
O'Leary stressed Ryanair would publish a new bid as soon as regulators permitted it. "Ryanair remains committed to acquiring Aer Lingus," he said. O'Leary declined to say whether Ryanair would increase its offer from the current bid price of 2.80 euros per share.
Ryanair's bid already looked troubled, however. Aer Lingus and its largest shareholder, the Irish government, fiercely oppose the deal. Ryanair's offer has so far won over less than 1% of shareholders and it has so far failed to build its 25% stake into the controlling share it needs.
Ryanair has run into trouble with regulators before and was ordered to pay back millions of euros in subsidies it received from the Belgian regional government of Wallonia to help run flights out of Charleroi. However, Ryanair has also made similar complaints about unfair state subsidies given to Air France.
Ryanair stunned Ireland Oct. 5 when it launched its surprise bid, barely a week after the Irish government had floated most of its holding on the Irish and British stock exchanges at a share price of 2.20 euros. At the time, Ryanair said it had bought 19.2% of Aer Lingus shares, but was legally restricted from buying more once the takeover plan sent Aer Lingus shares soaring above its bid price.
Analysts and investors almost universally viewed the current bid as doomed to fail. Analysts believe to be successful Ryanair will have to raise its bid above 2.80 euros.
Growing rapidly from its Irish base, Ryanair has revolutionized travel in Europe, spearheading low-frills cheap flights that forced Aer Lingus to do the same.