IAG launches cash offer for rest of Vueling

International Airlines Group (IAG), the holding company for the merger of British Airways and Iberia, has launched a cash tender offer to buy 100 per cent of the share capital of Vueling, the Spanish low cost carrier based in Barcelona.

In a statement filed Thursday with the National Securities Commission (CNMV), IAG said its subsidiary Iberia owns 45.85 per cent of Vueling’s shares currently and the Iberia board has agreed not to tender them in the offer. This means that Iberia would retain their shareholding in Vueling with IAG seeking to acquire the remaining 54.15 per cent.

The offer will be 7.00 euros per ordinary share of Vueling, a premium of 28 percent to Vueling’s share price prior to the offer. The total cost of acquiring 54.15 per cent is expected to be 113 million euros. It will be funded using internal IAG resources.

IAG chief executive Willie Walsh said: “With its leading position in Barcelona, European growth strategy and low cost base, Vueling has much to offer IAG. It has significantly increased capacity while remaining profitable, despite the Spanish economic slowdown, and already has extensive commercial arrangements with Iberia. We would plan to retain the current Vueling management team.

“This would be good news for Vueling as there are many advantages for the airline in this deal. It will benefit from the financial strength of a larger airline group, making it better able to compete with other airlines and invest in new customer products and services. The airline will also be able to generate some cost and revenue synergies as part of IAG mainly through joint financing and procurement.”