Aer Lingus says Ryanair bid undervalues airline

The Board of Aer Lingus says that it has considered the Ryanair offer but that it believes the Ryanair valuation of €694m undervalues the airline.

The Board says that there is significant uncertainty that any Ryanair offer is capable of completion.

Ryanair's told the stock exchange yesterday evening that it was making a cash offer for the former state airline, which values it at €694m.

The Aer Lingus Board notes that the 2006 offer was blocked by the European Commission and that Ryanair's second offer was withdrawn.

In a statement issued this afternoon, it says that the UK Competition Commission is currently investigating Ryanair's 29.8% stake and that any further integration could not take place without the consent of the UK competition commission.

It says the airline has cash in excess of €1 billion at 31 March 2012, leaving it well positioned for the future.

The Board says the management team has delivered a significantly improved operational and financial performance since 2009 has, they say, transformed Aer Lingus into a robust profitable airline.

Previous Ryanair bids under competition scrutiny

Ryanair’s previous bid attempt was blocked by the European Commission in 2007 on the grounds that it would adversely impact competition.

According to a note from Merrion Stockbrokers, the Commission said the two airlines at the time competed directly on 35 routes and if the merger was approved there would be a monopoly on 22 of these routes, with the merged entity holding 60% market share on the remaining routes.

Merrion analysts said they would be surprised if the Commission reverses its previous decision. However, they added that Ryanair states that it can address the competition concerns before it completes its latest offer.

Fianna Fáil has called on the Government to block the bid.

See how Aer Lingus and Ryanair shares are trading here

Ryanair already owns 29.82% of Aer Lingus a stake acquired over five years ago. The stake was reviewed by the EU and has recently been referred by the UK Office of Fair Trade to the UK Competition Commission.

Ryanair has said that the cash offer represents a premium of 38.3% over the Aer Lingus current share price.

The airline said it believes that the future of the Aer Lingus will be best served as part of Ryanair and added that it believed Ryanair will be one of five large airline groupings in Europe as the aviation market consolidates.

The European Commission has said it has as yet received no notification from Ryanair or the Government on any takeover bid by Ryanair of Aer Lingus.

A spokesman said the previous decision by the European Commission competition authorities to block a takeover bid in 2006 was "well known". Any new notification would be examined, a spokesman said.

Kenny says Government won't be pushed into firesale

Taoiseach Enda Kenny told the Dáil today that this was an improved offer from Ryanair but that the Government had to consider a number of issues such as what was best deal for the taxpayer and for business.

However, he said that the Government would not be pushed into a corner and forced to sell state assets. The Taoiseach said that the regulatory authorities in Europe were looking at the offer and that the European Commission would make its views known on the issue.

Mr Kenny also said that obviously the Government was concerned about dominance in the UK-Irish aviation market. He said it would make its own decision in due course on that matter. He repeated that the Government would not ''be shoved into a fire sale''.