DUBLIN: The board of Irish airline Aer Lingus has recommended a raised 1.36-billion-euro ($1.5 billion) takeover offer from the owner of British Airways, which must now soothe Irish government concerns to win approval.
The new offer from International Consolidated Airlines Group (IAG), its third in six weeks, is worth 2.55 euros per share, up from 2.40 euros, and includes a cash offer of 2.50 euros per share and a dividend of 0.05 euros.
Aer Lingus said its recommendation is subject to being satisfied with how IAG proposes to address the interests of relevant parties, including its main shareholders budget airline Ryanair and the Irish state.
The Irish government had sought to sell its 25 percent stake as part of the country's 2010 bailout by the European Union and International Monetary Fund but postponed the plan.
It is now facing mounting political pressure from the two main opposition parties, as well as the airline's trade unions, not to sell, raising the stakes just over a year before national elections.
IAG said it intends to operate Aer Lingus as a separate business with its own brand, management and operations.
"IAG recognises the importance of direct air services and air route connectivity for investment and tourism in Ireland and intends to engage with the Irish government in order to secure its support for the transaction," IAG said in a statement.
Shares in Aer Lingus were 1.2 percent higher at 2.40 euros at 0810 GMT. IAG rose 2.4 percent to 562 pence in early trade, the highest level since the group was formed four years ago.
David Holohan of Merrion Stockbrokers said the assurances offered by IAG should assuage many of the government's concerns.
"IAG has outlined plans for Aer Lingus which we believe are logical, attractive and will likely alleviate the concerns of the Irish government. Our view is that this news paves the way for the Irish government to support the deal," Holohan said.
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