RYANAIR HOPES ITS THIRD TIME LUCKY FOR AER LINGUS BID - Ryanair is dominating the business headlines again today. This follows Michael O'Leary's unexpected announcement to the stock market yesterday evening that he was making another offer to buy the 70% of rival Aer Lingus that he does not already own. Ryanair has made a cash offer of €1.30 per share, which values the company at almost €700m. The Government - which has a 25% stake in Aer Lingus - will surely be tempted by the offer too. It has committed to offloading its stake in Aer Lingus under obligations to the Troika, saying it won't do it for less than a euro per share. The question now is whether the European Commission will allow the deal to go ahead. It blocked a previous takeover bid by Ryanair five years ago on competition grounds. A case is also being taken by the Office of Fair Trade in the UK which could potentially force Ryanair to sell its stake in Aer Lingus, also on competition grounds. But Ryanair argues that the environment has changed given that there has been significant consolidation among flag carriers already such as British Airways merger with Iberia and its subsequent takeover of British Midlands.
All eyes will be on the ISEQ when it opens a little later this morning to see the market's response to Ryanair's latest move. Aer Lingus have released a statement noting the move and calling on shareholders not to take action.
Gerard Moore, an equity analyst with Merrion Capital says it is likely to be greeted positively by Aer Lingus shareholders as Ryanair is offering a 38% premium on its share price but that Ryanair shareholders may view the offer with more caution. He says the previous two attempts by Ryanair to buy Aer Lingus were both rejected on grounds of competition in the Irish market and he adds that nothing had really changed in this area.
Siobhan Creaton, author of 'Ryanair; how a small airline conquered Europe' says that Ryanair may be hoping that it's third time lucky for its takeover bid. She says the move speeds up the battle for control of Aer Lingus, adding that 174m could be there on the table waiting for the Government for its 25% stake. She says that the Ryanair move could see other interested parties coming out of the woodwork, including Ethiad, which already owns a 3% stake in the airline. But she points out that Ethiad can not take overall control of the airline because it is not an EU airline.
Siobhan Creaton says that it is hard as a consumer to see the latest move by Ryanair as a good thing as competition is bound to suffer if Ryanair succeeds. While Ryanair brought the low cost model to the Irish aviation industry, Aer Lingus has become very lean itself in order to compete with its rival.
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MORNING BRIEFS - Bank of Ireland has named former Lloyds Banking Group executive Archie Kane as its Governor Designate with immediate effect. Mr Kane will succeed Pat Malloy who will retire as a non-executive director and Governor of the bank on June 29.
*** The Small Firms Association is holding a conference today on the subject of boosting consumer confidence. It is calling on the Government to take a number of steps to get people spending again. The SFA cites measures to boost employment, increasing credit availability to SMEs and tackling the personal debt crisis as the three most important steps to improving confidence.
