British Airways and private equity giant Texas Pacific Group (TPG) are circling Iberia Airlines, Spain's largest carrier, in the wake of the "open skies' agreement approved by the EU last week. The Spanish airline is valued at Euro 3.6bn (£2.4bn).
Fernando Conte, the chairman of Iberia, has alerted the company's board to interest from four groups, also including Deutsche Lufthansa and an unidentified Spanish fund.
The board granted Mr Conte permission to share data with potential partners but no offer or proposal of any kind had been made, the company said in a statement to the Spanish stock market regulator on Wednesday. BA already holds a 10 per cent stake in Iberia and has long been thought of as the company's most logical merger partner.
Spanish banks BBVA and Caja Madrid, which hold 9 and 10 per cent in Iberia respectively, have made it clear that they would be happy to sell their holdings if the price is right. The Spanish state also owns a 5 per cent stake.
Stephan Gemkow, Lufthansa's chief financial officer, said last week that the German carrier had a responsibility to consider a possible takeover of Iberia.
TPG, which is in the midst of a takeover of the Australian flag carrier Qantas, is understood to have approached Iberia. TPG came into being in the 1990s when founders David Bonder-man and Jim Coulter raised money to take over Continental Airlines.
The open-skies agreement, which opens transatlantic travel to more carriers this autumn, spurred speculation in the market that it could lead to a rash of mergers in the airline industry.
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TPG's all-cash bid is 10 percent below Iberia's Thursday closing price of $5.34 billion and values the company at $4.55 billion.
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The firm that turned around Continental and America West, now trying to buy Qantas, Iberia and Alitalia.
BA, which has a 10% stake in Iberia, said it had "approached a number of private equity companies about making a consortium offer for Iberia.''