MINISTER FOR Transport Leo Varadkar said he could not make a recommendation on Ryanair’s bid for Aer Lingus until it was clarified whether it breached competition laws.
“There’s a very big outstanding issue there in relation to the competition law, and obviously I wouldn’t be able to recommend to my colleagues that we make any firm decision until it’s been clarified as to whether we could consider this offer as being legal or not,” Mr Varadkar said yesterday in an interview with Newstalk.
Earlier, in an interview with RTÉ, the Minister said: “We have to consider whether giving any airline or airline group a monopoly on most of the routes out of Ireland is a good idea or not. What can stop them is competition law, EU competition law and potentially even UK competition law.”
Ryanair, which already owns 29.8 per cent of Aer Lingus, made a €694 million bid to acquire the former national carrier on Tuesday. Mr Varadkar said the Government, which will discuss the proposal on Tuesday, wanted to get a “good price” for its remaining 25 per cent holding.
“When it comes to selling the Government’s stake in Aer Lingus, we made it clear that we intended to do it, but at a time and a price of our choosing. I’ve always taken a view that the Aer Lingus price is undervalued. The Ryanair offer puts it at €1.30 a share, but that only values the company at around €700 million. If you take the company’s cash, its aircraft and the value of the business, it is worth much more than that.”
Aer Lingus had gross cash of €1 billion as of March 31st, with debt of €556.1 million, according to a trading statement on May 3rd.
Irish billionaire Denis O’Brien, an Aer Lingus investor who opposed an attempted takeover by Ryanair five years ago, said in a Bloomberg television interview that he had increased his stake in the smaller airline. He said Ryanair’s renewed pursuit undervalued Aer Lingus and may be “a ploy” to start talks with Abu Dhabi-based Etihad Airways, which bought a 2.99 per cent stake in Aer Lingus last month.
He said he had a 3.6 per cent to 3.8 per cent holding.
Aer Lingus shares traded down 3 per cent at €1.05, 25 cents below the offer price, after climbing 15 per cent on Wednesday.
Ryanair was up 0.2 per cent at €4.02. – (Bloomberg)