NEW YORK (The Deal) -- British Airways owner International Consolidated Airlines (ICAGY), or IAG, on Friday, June 19, posted the documentation for its €1.4 billion ($1.58 billion) offer for Irish carrier Aer Lingus (AIRXY), putting the target's rival and minority shareholder Ryanair (RYAAY) in a position to make the takeover fly or to stop the deal getting off the ground.
Yet while Ryanair has not yet said it will accept the offer, it is also claiming that it is in no position to block a deal.
The terms of the deal are unchanged from those approved by the Irish parliament last month: an offer of €2.50, plus a dividend of 5 euro cents a share.
The offer is structured as a simple takeover. It is theoretically conditional on the bidder receiving acceptances for at least 90% of the shares, allowing it to squeeze out any remaining minorities. But the bidder may decide to declare it unconditional if a minimum of 50.1% of the voting rights are tendered. The offer closes at 5 p.m. on July 16, unless the Irish Takeover Panel agrees to an extension.
The Irish government has agreed to tender its 25.1% stake, following a long negotiation over the maintenance of Aer Lingus's take-off and landing slots at London's Heathrow Airport. But the document also specifies Ryanair's agreement to sell its 29.8% stake in Aer Lingus as a minimum condition.
Ryanair did not immediately issue any new statement when the IAG offer was posted. Instead, a spokesman repeated the previous non-committal position.
"As we have previously stated," he said, "the board of Ryanair will consider the IAG offer document, when it is received, and will make its decision in due course on the merits of any such offer, in the best interests of all Ryanair shareholders."
But he also reiterated Ryanair's demand that U.K. Competition and Markets Authority's Simon Polito retract what it called his "false and misleading claims" that IAG's bid for Aer Lingus was dependent on securing Ryanair's agreement to sell its shareholding. Polito is the chairman of a CMA inquiry committee charged with investigating Ryanair's Aer Lingus stake.
"If the IAG offer gets to 50.1%, it is clear that there is nothing Ryanair can do to prevent IAG acquiring control of Aer Lingus," Ryanair said on June 11. "No 30% shareholder can block a takeover bid if more than 50% of other shareholders accept it."
Ryanair's holding is a legacy of its own previous unsuccessful takeover bids for Aer Lingus, which have been blocked by regulators in both the U.K. and the European Union.
Polito was speaking after the CMA upheld the regulator's previous demand that Ryanair sell down its stake to 5%, dismissing Ryanair's claim that the IAG bid for Aer Lingus represented a material change in circumstances.
But Ryanair said it had instructed its lawyers to appeal to the Competition Appeals Tribunal against what it called a "ridiculous" ruling. It argued that existence of the IAG bid itself undermined the CMA's view that Ryanair's stake was enough to prevent a takeover offer from another airline.
"Mr. Polito should now explain how the CMA can defend this divestment decision when the IAG offer has blown it out of the water. He should also withdraw his false claim that a 30% shareholder can block a takeover bid, or decide whether any takeover offer is successful or otherwise," it said.
Ryanair said the CMA's decision was "factually unsustainable and legally flawed as the IAG offer for Aer Lingus proceeds."
If the CMA's ruling is upheld by the Competition Appeals Tribunal, and Ryanair is forced to sell, the Dublin carrier will no longer have much influence.
However, Ryanair is unlikely to be forced to comply within a month. Thus far, the appeals tribunal has not received any formal appeal from Ryanair, according to the CAT registry.
Meanwhile IAG's own bid is still subject to approval by the European Commission, as the competition regulator for the European Union. That approval is currently expected in early July.