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Ireland’s government is preparing to reject IAG SA’s indicative offer to buy its 25 percent stake in Aer Lingus Group Plc, according to a person familiar with the situation, prompting the stock to drop as much as 9.5 percent.
A final decision has yet to be taken, according to the person, who asked not to be identified because the matter isn’t public. An Irish Transport Ministry official declined to comment on the status of deliberations, as did a spokeswoman for IAG.
Last week, IAG Chief Executive Officer Willie Walsh offered assurances on maintaining Aer Lingus routes between Ireland and the U.K. as he sought to overcome mounting political resistance to the proposed takeover of the airline he ran until 2005.
IAG has said it won’t proceed without the endorsement of the government, with the two coalition parties trailing in the polls a little over a year before scheduled general elections.
In the case of Aer Lingus, “there is a broader understanding by government politicians that the future of Aer Lingus is probably going to be in someone else’s hands as part of a group,” said John Strickland, an analyst with JLS Consulting in London. “It’s just that the timing seems to be so sensitive with this election coming up.”
Aer Lingus dropped as much as 21 cents to 2 euros in Dublin, the most in 15 months, and traded at 2.1 euros as of 3:30 p.m. in Dublin. IAG dropped as much as 1.8 percent.
Talks between a group of government ministries and IAG on its proposal to make an offer for Aer Lingus continue, the Transport Ministry said in an e-mail statement. The group will be “engaging further” with IAG this week, the ministry said.
–With assistance from Kari Lundgren in London and Joe Brennan in Dublin.
This article was written by Dara Doyle from Bloomberg and was legally licensed through the NewsCred publisher network.