Ryanair shareholders seek answers on Aer Lingus

Shareholders are pressing Ryanair on whether or not it plans to sell its €400 million Aer Lingus stake to IAG, which this week launched a formal offer for the Irish flag carrier.

The news comes as IAG begins seeking the EU competition authority’s approval for its its almost €1.4 billion bid for Aer Lingus.

Ryanair chief executive Michael O'Leary and his colleagues are meeting investors in Europe and north America after the company published results showing profits grew by 66 per cent to €867 million in the 12 months to March 31st.

It is understood that institutional shareholders have been pressing them on the likely response to IAG, whose €2.55-a-share offer for Aer Lingus values Ryanair’s 29.8 per cent stake at €410 million. Those backers are thought likely to favour a sale.

The price allows the company recover the money it spent buying the 160 million Aer Lingus shares in the first place. If the IAG offer were to fail for any reason, it would leave Ryanair facing the prospect of being forced by the UK Competition and Markets’ Authority to sell most of its holding for far less than the current offer.

According to their most recent annual reports, Ryanair and IAG have three large shareholders in common. US-based Capital Research and Management, Ryanair's biggest investor with 16.6 per cent, owns 5 per cent of IAG. Standard Life, IAG's second-biggest backer with just over 5 per cent, holds 3.2 per cent of Ryanair. Blackrock owns around 5 per cent of both.

Pivotal position

The Dáil’s decision to allow the Government pledge the State’s holding to IAG puts Ryanair in a pivotal position, as the deal cannot go ahead if it does not accept the offer.

Since IAG first signalled its intention to bid for Aer Lingus last December, Ryanair has consistently said that its board will consider any offer for its Aer Lingus shares on its merits.

Meanwhile, IAG is preparing a formal submission to the EU's competition authority on its bid. The mergers and acquisitions watchdog will scrutinise the takeover's potential impact on routes where Aer Lingus is competing with IAG subsidiaries, British Airways, Iberia and Vueling. A phase one investigation could take up to three months to complete.