LONDON/DUBLIN — Ryanair is willing to raise its offer for rival Aer Lingus but will not wage a prolonged battle if shareholders in Ireland’s former state airline continue to oppose the deal.
Ryanair Chief Executive Michael O’Leary told reporters he would be willing to increase his offer price of 1.40 euros a share, equivalent to about 750 million euros ($995 million).
However, in a statement Europe’s largest low-cost carrier ruled out raising the price to 2 euros or above. A spokeswoman for Ryanair declined to comment further.
Aer Lingus said the offer was “unlikely to be capable of completion” as Ryanair had still not made clear why it would be approved by the European Commission, which blocked an earlier offer by Ryanair on competition grounds.
“Aer Lingus continues to believe that the offer is diversionary and fatally flawed,” Aer Lingus said, reiterating that it expected to be profitable in 2008 and 2009.
Aer Lingus shares closed down 5% at 1.52 euros, still a premium to the level of the offer.
Ryanair, which has accumulated more than 29% of Aer Lingus shares, has been pursuing its neighbor at Dublin airport for more than two years and in December made a second bid despite opposition from management and staff at Aer Lingus.
“(We are) open to negotiate with all shareholders the possibility of a small increase in price if that were to get the deal over the line,” O’Leary said.
“If the government were to come to us, for example, and say ‘We are interested in selling our stake but not at this price, could we negotiate on price?’, I think we would be, within reason, open to negotiating,” he added.
Ryanair said in an earlier statement on Friday it would pursue its second bid for Aer Lingus with regulators only if Aer Lingus’s major shareholders gave their prior backing.
Ryanair’s first offer, which valued Aer Lingus at twice what is now on offer, was rejected by European Union regulators as well as major shareholders such as the Irish government, which owns about 25%, and staff who hold about 14% through The Employee Shareholder Ownership Trust (ESOT).
Ryanair repeated its offer for Aer Lingus would remain open for acceptance until Feb. 13, adding it expected EU regulators to decide within 25 working days whether to approve any takeover or proceed to a more detailed Phase II review.
“Ryanair … does not intend to engage in a lengthy Phase II review process with the EU unless it receives such support from Aer Lingus shareholders, including the acceptance of the offer by either the Irish government or the ESOT,” it said.