Ryanair has withdrawn its bid to acquire fellow Irish carrier Aer Lingus after the European Commission (EC) launched an in-depth investigation into the proposed deal, although it hopes to make another offer in future.
A widely quoted statement issued by the Irish budget carrier late yesterday says the takeover offer has now lapsed. It says its decision was made after the EC's competition division's probe opened.
The hostile takeover bid was expected to fail anyway, as Ryanair had set 22 December as the closing date in an early December statement and few acceptances had been received by shareholders for the €2.80 ($3.70) per-share offer. Ryanair repeatedly insisted it would not increase its offer price.
Ryanair reportedly says in its statement that it intends to make a further offer for Aer Lingus if the EC gives it clearance following a so-called Phase II review. Making another bid would require the special approval of the Takeover Panel.
The EC says there are major competition concerns regarding the proposed takeover. Ryanair rejects these concerns, however, and suggests European regulators are biased against it.
An EC statement posted on its website announcing the detailed investigation says the proposed takeover “would raise serious competition concerns in the passenger air transport sector and in particular could reduce choice for consumers and could give rise to higher fares than would be likely if the two carriers remained separate”.
It adds: “The Commission now has 90 working days [until 11 May 2007] to take a final decision on whether the concentration would significantly impede effective competition within the European Economic Area or a substantial part of it. The decision to open an in-depth inquiry does not prejudge the final result of the investigation.”
It goes on to say that although Ryanair offered on 29 November to make concessions to ease competition concerns, “the market testing of the initial remedies concluded that the proposal was not sufficient to remove the serious doubts identified”.
Ryanair later submitted a “substantially improved remedy proposal”, the EC says, but it came too late for a proper evaluation to be carried out.
Ryanair launched its surprise takeover offer for Aer Lingus in October and has since acquired a sizeable minority stake.
Source: FlightGlobal.com
