Page last updated at 09:27 GMT, Tuesday, 16 December 2008

Aer Lingus rejects Ryanair offer

Ryanair and Aer Lingus aircraft
Aer Lingus has again rejected Ryanair's offer

Irish airline Aer Lingus has rejected a hostile 750m euro (671.9m; $1bn) takeover bid from its rival Ryanair.

Ryanair, which already owns 30% of Aer Lingus, launched its revised formal offer on Monday by asking shareholders, to accept the deal.

Aer Lingus chairman Colm Barrington dismissed the offer, saying that it contained "nothing new".

But Ryanair chief Michael O'Leary said if no other bidder emerged, the offer had a "strong" prospect of success.

The low-cost carrier offered 1.40 euros a share for the former state airline this month, just half the price of a previous offer in 2006 which was blocked by the EU on competition grounds.

Revised offer

Ireland's mergers watchdog, the Takeover Panel, last week blocked two guarantees in Ryanair's proposed bid, arguing they could breach takeover rules by favouring one shareholder, namely the Irish government which owns 25% of Aer Lingus.

Ryanair has since changed the two clauses - a pledge to give the Irish government a veto over selling Aer Lingus' Heathrow Airport landing slots, and a 100m euro guarantee paid to the government if Ryanair defaulted on its promises to cut fares.

Ryanair said that if it was successful, a Ryanair-owned Aer Lingus would be barred from selling its Heathrow slots unless both houses of Ireland's parliament approved the move.

It also changed the beneficiary of its 100m euro guarantee, from the government to any charity of the government's choice.

The board of Aer Lingus has already vowed to vigorously oppose the new approach, including by seeking a "white knight" investor.

"This document contains nothing new. It is the usual stream of invective, spin and misrepresentation that we expect from the people at Ryanair," Aer Lingus chairman Colm Barrington said in a statement.

However, Ryanair chief executive Michael O'Leary labelled Aer Lingus's management as being "hell bent" on selling out to anyone but Ryanair.

Ryanair said in its newly published offer document that shareholders should vote in favour of a creation of a united Irish airline by 5 January.

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