Aer Lingus was discussing a potential merger with another airline last summer before Ryanair launched a hostile takeover bid for its Irish rival.
The disclosure emerged today in documents contained within the appendices to the Competition Commission’s report calling for Ryanair to cut its shareholding in Aer Lingus from almost 30% to 5%
The documents detailing the merger talks appear to explain the commission’s view that Ryananir’s 29.8% shareholding in Aer Lingus would impede Ireland’s national carrier from “combining with another airline to build scale and achieve synergies to remain competitive,” the Daily Telegraph reports.
Aer Lingus held confidential discussions “in the first part of 2012” with another airline over a “possible combination”, the documents reportedly show.
Discussions progressed to the stage of a “confidential exchange of financial information, and contacts had taken place between senior management and respective financial advisers”.
Talks ended following the announcement of Ryanair’s hostile bid on June 19, when the low cost carrier offered €1.30 per Aer Lingus share - its third attempt at gaining control of its Irish rival since 2006.
The documents are reported to be heavily redacted and names of other parties and commercially sensitive information has been removed.
But they reveal that the other airline involved in talks last year told the Competition Commission that Ryanair’s shareholding in Aer Lingus “was a key consideration” when assessing what could be achieved from the discussions.
The talks came to an end “primarily” because the other carrier “did not want to be perceived as a key player in the acquisition process”.
Aer Lingus chief executive Christoph Mueller made a presentation to the board earlier this year on several strategic opportunities.
These included acquiring another unnamed airline; a “potential combination” with another organisation; or the creation of a new joint venture company in which Aer Lingus and another airline would invest. The joint venture would pursue expansion on European routes.
The airline’s board resolved in favour of “inorganic growth initiatives” . Non-disclosure agreements are “in place” with a number of “entities”, according to the documents, according to the newspaper.
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