Aer Lingus share price up, to consider sweetened IAG takeover bid

Aer Lingus Group Plc is weighting a higher takeover offer from British Airways owner, valuing the Irish company at €1.36 billion.

The Dublin-based company confirmed on Monday that International Airlines Group has made a third takeover proposal. The deal includes a cash payment of €2.50 per share and a dividend of €0.05 a share, IAGs previous offers valued the carrier at €2.40 and €2.30 per share.

Aer Linguss board has rejected those bids, saying they undervalued the company. However, now the Irish carrier showed signs of interest for the first time and said it was “considering” the possibility of a sale.

Besides the boards approval, the deal would also require the agreement of Aer Linguss two biggest shareholders, budged carrier Ryanair Holdings and the Irish government.

Ryanair has a 29.9% stake in the company, which it acquired after its takeover offer was rejected by Aer Lingus in 2013, while the government holds 25% of the airline.

The purchase would provide IAG with much desired additional take-off and lading spots at London Heathrow airport, one of the most important hubs in Europe. Besides boosting its presence in British Airways home base, the deal would also give IAG access to trans-Atlantic routes through Ireland.

IAG, which was created by the merger of Spains second-largest airline Iberia and British Airways in 2011, acquired British Midland International in 2012 for £172.5 million in order to get extra slots at Heathrow.

However, IAG released a statement on Monday and said that: “There can be no certainty that any further proposal or offer will be forthcoming. A further statement will be made if and when appropriate.”

Both the two biggest shareholders have said that they will consider every offer received. Additionally, Ryanair is battling a decision from Britains competition regulator to reduce its stake in Aer Lingus to 5%.

Meanwhile, the Irish government said it would be cautious when assessing the offer, if recommended by Aer Lingus board. Over the weekend Transport Minister Paschal Donohoe said the government has to take into consideration how the sale would affect Aer Lingus employees and also the accessibility to Ireland.

Mounting political opinions against the sale have put additional pressure on Irelands government.

Aer Lingus gained 0.43% on Friday and closed at €2.35 in Dublin. On Monday to stock climbed 1.70% to trade at €2.39, marking a one-year increase of 67.13%. The company is valued at €1.25 billion.