U.K. competition authorities provisionally confirmed a decision requiring Ryanair Holdings Plc to sell-down its stake Aer Lingus Group Plc despite a potential takeover bid by British Airways parent IAG SA.
The proposed remedy, which would see Ryanair trim its holding to no more than 5 percent, should stand and isn’t affected by IAG’s proposed offer for Aer Lingus, the U.K. Competition and Markets Authority said in a statement Friday. The decision made in August 2013 said that budget airline Ryanair’s 29.8 percent stake in Aer Lingus gave it too much control over its primary rival in Ireland.
“Without any action to reduce its shareholding, Ryanair would remain a significant hurdle to any merger because it has an incentive as a competitor,” Simon Polito, chairman of the Ryanair and Aer Lingus Inquiry Group, said in the statement. “Our provisional view is that neither recent events nor the time that has passed since our final report are reasons not to implement the divestment remedy.”
IAG is seeking to buy Aer Lingus for 2.55 euros a share, valuing the company at 1.36 billion euros ($1.5 billion). IAG, as International Consolidated Airlines Group is known, is trying to persuade the Irish government, the other major shareholder with a 25 percent stake, to support the bid.
IAG and Irish government representatives are moving closer to an agreement after making progress on the length of commitments on operating Aer Lingus routes from Ireland to London Heathrow airport following a potential IAG takeover, people with knowledge of the matter said this week.
Ryanair fell 1.2 percent to 11.09 euros at 12:05 p.m. in Dublin. Aer Lingus declined 0.4 percent.
This article was written by Kari Lundgren from Bloomberg and was legally licensed through the NewsCred publisher network.