Ryanair breached stock exchange rules when it announced the details of its €1.4 billion offer for Aer Lingus, the Takeover Panel has found.

Ryanair claimed in an announcement of its offer on October 20th that each Aer Lingus employee would gain €60,000 from the sale of their shares, but the Takeover Panel has queried the evidence for this.

It pointed out that any document or statement from an offeror must meet the same standards as a prospectus and display "accuracy, completeness and fair presentation".

The finding of the panel came as Aer Lingus shares slipped back by over 2 per cent to €2.73, their lowest level in several weeks. While trading volumes were low, traders said the lower price was a reflection of a growing feeling that the Ryanair bid has too many hurdles to get over, particularly on competition grounds. Many observers are also concluding that an improved Ryanair offer will not now come and the bid could be withdrawn.

About 2.6 million shares traded on the day, although Aer Lingus was not the only airline stock to experience a fall, with Ryanair itself dropping slightly.

Citigroup, in a note yesterday said the bid was unlikely, but this was not necessarily a negative as a takeover was likely to distract Ryanair management and create a "potential labour backlash".

Meanwhile the panel said the Ryanair assertions about how much employees would stand to gain lacked evidence. "Sufficient detail on the assumptions underpinning the figures in the statement were not disclosed," said the panel.

As a result, it argued, "Aer Lingus shareholders were provided with insufficient detail to enable them to assess the significance of this statement".

Consequently Ryanair has been found to have breached Rule 19.1 (a) and (b). The panel while not directly challenging the Ryanair figures, points out that a figure of €38,864 per employee has been circulated by Employee Share Ownership Trust (ESOT) with ex-employees of the airline getting €13,915 each. The ESOT figures are based after the repayment of borrowing costs are taken into account. These borrowing cost relate to loans the ESOT took out to buy share held for them by the Government.

Ryanair has declined to comment on the findings, but the Takeover Panel's conclusions will be a blow to the company. Aer Lingus and the ESOT have both questioned figures included in the Ryanair offer document over the past two weeks.

Ryanair declined to comment and a company spokeswoman said its management team was on an investors' roadshow.

Last night the EU Commissioner for the Internal Market and Services, Charlie McCreevy, paid generous tribute to Ryanair and its record, although he stopped short of throwing his support behind its Aer Lingus bid.

"On so many fronts Ryanair has been a phenomenal success story. It has transformed people's lives, transformed businesses, even transformed attitudes".