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Ryanair launches another takeover bid for Aer Lingus

DUBLIN--Leading European budget airline Ryanair launched a surprise new takeover bid Tuesday for its Irish rival Aer Lingus and called on the cash-strapped Irish government to sell its key stake this time.

Dublin-based Ryanair said it would offer 1.30 euros (US$1.65) per share, a 38-percent premium over Aer Lingus' current share price, in a deal that would value the airline at 694 million euros (US$880.7 million).

Ryanair launched a hostile takeover of Aer Lingus in 2006 immediately after Ireland floated the state airline on the Irish and British stock exchanges. But the government refused to sell its remaining 25-percent stake and European Union regulators blocked the bid on competition grounds, saying a merged Ryanair-Aer Lingus operation would control more than 80 percent of Ireland's air passenger traffic.

Playing a long game of attrition, Ryanair since has remained Aer Lingus' largest shareholder with a 29.8-percent stake and sought, unsuccessfully, to influence boardroom decisions.

Aer Lingus and the government declined to respond Tuesday. Labor unions and opposition politicians appealed to the government not to sell to Ryanair, renowned as a ruthless cost-cutter with a relentless pursuit of building market share.

But in a statement Ryanair argued that the reasons for the government not to sell had evaporated since the demise of the Celtic Tiger economic boom in 2008, followed quickly by Ireland's international bailout in 2010.

As part of its debt-cutting negotiations with EU and International Monetary Fund lenders, the 15-month-old government of Prime Minister Enda Kenny has promised to sell state assets. It already has indicated plans to sell its Aer Lingus stake if the price and competition effects are right. Unlike their government predecessors, Kenny and Finance Minister Michael Noonan haven't ruled out a sale to Ryanair.

“Since the government's stake in Aer Lingus will now be sold,” Ryanair said, “the important policy issue is whether it will be sold to a successful Irish-based company which will support growing Aer Lingus' traffic, lowering its unit costs and creating new jobs, or whether it will be sold to a non-Irish investor which will, Ryanair believes, lead to the inevitable break-up of Aer Lingus.”

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In this Sept. 1, 2010 file photo, an airplane of the Irish low-cost airline Ryanair takes off from Barcelona's airport. Leading European budget airline Ryanair launched a surprise new takeover bid Tuesday, June 19 for its Irish rival Aer Lingus and called on the cash-strapped Irish government to sell its key stake.

(AFP)

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