The Government has announced it is not selling its 25% stake in Aer Lingus to Ryanair.

Ryanair made a €694m offer for Aer Lingus in July, valuing the State shareholding at €174m.

Minister for Transport Leo Varadkar said Ryanair's bid was not in the best interest of competition, connectivity and employment.

The minister said the Government remained committed to selling its shareholding and would appoint advisers in the New Year.

The European Commission, which blocked Ryanair's previous bid for the company on the grounds that it would be anti-competitive, is currently reviewing its latest offer.

The Government's decision not to sell its stake to Ryanair effectively scuppers any takeover bid.

Under Irish law, Ryanair would have to receive acceptances from 90% or more of Aer Lingus' shareholders in order to gain outright control of the company.

Had Ryanair received that level of acceptances, it would have been permitted to compulsorily acquire the remaining shares in Aer Lingus.

Ryanair's offer document, sent to shareholders in July, outlines its intent to de-list Aer Lingus from the Irish Stock Exchange in the event that its offer is accepted by 75% or more of the company's shareholders.

The Government's 25.1% stake would enable it to block such a move, even if Ryanair's bid were approved by the European Commission and accepted by a sufficient proportion of Aer Lingus shareholders.