Shares in Aer Lingus and Ryanair rose in value this morning despite misgivings by analysts as to the value of a takeover of the former state airline by Europe's largest budget carrier.
Share prices increased as speculation mounted Ryanair might have to raise its initial offer of €2.80 a share for the former state airline.
Ryanair shares were 2.08 per cent higher at €8.85 earlier today, and Aer Lingus was up by 1.7 per cent at €2.95 - 15 cents above the price offered by Ryanair yesterday in a bid totalling €1.48 billion ($1.9 billion).
Despite the upsurge in share price, analysts see few benefits for Ryanair in acquiring the former state carrier. A number of them have downgraded their recommendations for its stock.
Ryanair has 19.2 per cent of Aer Lingus and, under stock exchange rules, can buy a further 10 per cent at no more than the €2.80 offer price.
But traders noted that trading volume in Aer Lingus was thin.
Analysts said the deal seemed attractive for shareholders in Aer Lingus, which launched its initial public offering only last week at €2.20 a share, but that the advantages for Ryanair were less clear.
The acquisition would be Ryanair's first move into the long-haul arena. Aer Lingus flies to a number of cities in the United States and to Dubai in the Middle East.