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Vista Capital, Texas Pacific Team Up To Bid For Iberia

Reuters
Friday, 27 Apr 2007 | 11:51 AM ET

Madrid-based fund Vista Capital said on Friday it has teamed up with Texas Pacific Group to bid for airline Iberia, and sources said the two were talking to British Airwaysabout joining the team.

Spanish private-equity firm Ibersuizas said it was also looking at joining the TPG-Vista consortium. A source in London said it had already joined the group, though a spokesman for the fund said it had not yet made a decision.

News of a possible offer increases the likelihood of a bid battle for the the Spanish flag carrier.

Sources close to the situation have said that TPG rival Apax Partners was looking to launch a bid, but it was unclear at that stage whether this would be in partnerhip with TPG, or in opposition to the private equity airline specialist.

"We have allied with TPG to launch an offer for Iberia," said a spokesman at Vista, a fund jointly owned by Banco Santanderand Royal Bank of Scotland.

A source in London said the consortium was talking to British Airways, which owns 10% of Iberia and which said on Monday it was talking to private equity investors about a possible offer.

"The TPG consortium is likely to include a strategic partner and a Spanish partner as well," the source said.

Both Iberia and BA declined to comment on Friday.

Iberia has asked TPG to spell out who its investment partners might be and to say whether any Spanish companies were involved. The U.S.-based firm needs Spanish partners to retain Iberia's foreign landing rights on the airline's lucrative routes to Latin America.

Portuguese Bank BPI said it saw a 75% chance of a bid at 4 euros a share and a 50% chance of a bid battle that could raise the final price to 4.40 euros a share.

"Potential bids for Iberia continue adding up names to possible consortia, which shows that negotiations keep advancing," it said in a note.

News reports say Apax is looking at a move on Iberia teamed with Spain's Gestair, a firm which leases aircraft to the airline. Germany's Lufthansa has also been named as a possible bidder.

Texas Pacific Group made a 3.6 euros a share indicative bid for Iberia on March 30, valuing the airline at 3.4 billion euros ($4.6 billion). However, it had not taken a final decision on bidding because Iberia has not opened its books, the source said.

The source added that TPG's consortium had strong financial backing from Santander, which also owns Ibersuizas.

Shares in Iberia, which have fallen back in recent days, jumped almost 2% and then climbed 3.2% higher to 3.86 euros by 1211 GMT after the report TPG was talking to BA.

In addition to its existing stake, BA has first refusal on a further 27% of Iberia's stock.

Non-European Union buyers like TPG can hold up to 49% of an EU airline but under a new "open skies" pact between Washington and Brussels which takes effect next March that will fall to 25%.

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