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DUBLIN (AP) — Irish airline Aer Lingus has rejected a takeover bid by the International Consolidated Airlines Group, the parent company of British Airways and Spain's Iberia.
Shares in the Dublin-based carrier surged by as much as 21 percent Thursday amid rumors of a bid. Those gains were sharply pared after IAG issued a statement confirming its proposal had been rejected by the Aer Lingus board, but the stock still finished Dublin trading up 9 percent at a seven-year high of 1.99 euros ($2.45).
Aer Lingus described the IAG offer as "preliminary, highly conditional and non-binding" and said it "fundamentally undervalues Aer Lingus and its attractive prospects."
No price details of Sunday's offer were disclosed. Aer Lingus rejected the offer two days later.
Analysts long have seen IAG as a likely bidder for Aer Lingus. Its Irish chief executive, Willie Walsh, was previously chief executive of Aer Lingus before the formerly state-owned airline's 2006 privatization.
Aer Lingus operates a substantial European short-haul network and a half-dozen routes to the United States. In recent years it has struggled to compete with larger Dublin-based rival Ryanair, which has mounted three failed takeover bids. Ryanair remains Aer Lingus' largest shareholder with a 30 percent stake, while the Irish government has retained 25 percent.
Abu Dhabi-based Etihad Airways has stoked speculation that it hopes to acquire Aer Lingus by building a 5 percent stake in the past two years and striking a code-sharing agreement.
Any successful bidder would win coveted slots at Heathrow in London, the highest-demand airport in Europe. Aer Lingus holds the fourth largest number of slots at Heathrow, a strategic hub for trans-Atlantic travel.
Aer Lingus has struggled to record consistent profits since its flotation, hampered by frequent clashes with its unionized work force and unrelenting demands to reduce the deficit in its pension pot. To compete, it adopted many of the trading practices of Ryanair, reducing short-haul frills and adding charges for everything from bags to credit card use.
Last month Aer Lingus reported its best quarterly profit since 2008 and raised its full-year outlook, citing strong performance of trans-Atlantic services, including on two new routes to Toronto and San Francisco.
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