Ryanair Holdings Plc plans to appeal a move by European regulators to block its 694 million-euro ($932 million) bid for Aer Lingus Group Plc, in a last-ditch attempt to salvage a deal that has already failed twice before.
Ryanair has met “every competition concern raised in the EU’s Statement of Objections and during the review process,” the Dublin-based carrier said today, after it was informed that the European Union Commission plans to block the bid.
Europe’s largest discount carrier owns about 30 percent of Aer Lingus and renewed an attempt in June to buy the rest after two prior takeover efforts failed. Ryanair offered routes and cash to rivals such as Flybe Group Plc and British Airways to gain regulatory approval. The move by the competition watchdog comes only weeks after the commission banned United Parcel Service Inc. (UPS:US)’s proposed takeover of TNT Express NV.
“This is clearly disappointing for Ryanair, having put together an exhaustive and comprehensive list of concessions,” said David Holohan, an analyst at Dublin-based Merrion Capital. “Given that this is the third takeover attempt to fail, we do not envisage a fourth move by Ryanair.”
Aer Lingus fell as much as 9 cents, or 7.3 percent, to 1.24 euros, while Flybe slumped as much as 7.75 pence, or 14 percent, to 49.25 pence. Ryanair fell as much as 0.6 percent.
Flybe said it was “disappointed” and would “await the outcome of the appeal process,” according to a statement today. Aer Lingus reiterated the offer should not have been made and said it will continue to assist an investigation by the U.K.’s Competition Commission into the “anti-competitive effects” of Ryanair’s minority shareholding.
EU regulators already blocked Ryanair’s bid for Aer Lingus in 2007, saying a takeover would allow the discount airline to dominate 35 routes and control 80 percent of the market in Dublin. Ryanair lost a 2010 appeal of the merger ban.
Ryanair had offered to pay Flybe 100 million euros to take over almost half of Aer Lingus’s short-haul business in an effort to persuade regulators that the U.K. airline could replace the Irish carrier as a rival.
The carrier’s latest push for control at Aer Lingus has also drawn opposition from Ireland’s government. Transport Minister Leo Varadkar, who controls a 25 percent government stake in Aer Lingus, said today that Ryanair’s concessions wouldn’t guarantee competition and connectivity on flights from the island nation. The government continues its opposition to the bid, he said in an interview with RTE Radio in Dublin.
“The Irish government is an expected seller of its stake in Aer Lingus,” RBC Capital Markets analyst Damien Brewer said in a note to investors today. “We think a sale at the same time as the Irish government might help maximize Ryanair’s exit value for its stake if its appeal fails.”
Antoine Colombani, spokesman for EU Competition Commissioner Joaquin Almunia, said the commission will take a decision in this case at the end of February or the beginning of March.
Ryanair Chief Executive Officer Michael O’Leary said in September that the company would consider selling its Aer Lingus stake if regulators turned down a “revolutionary” package of concessions.
The Brussels-based antitrust agency has a March 6 deadline to rule on the deal. It said in August that the takeover could eliminate competition on a large number of routes because the two airlines are each other’s closest rivals and few new competitors are likely.
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