IAG Rules Out New Bid For Norwegian Air
Aer Lingus owner IAG has said it will not make a new bid for Norwegian Air and will sell its remaining stake in the budget airline.
"International Airlines Group (IAG) confirms that it does not intend to make an offer for Norwegian Air Shuttle ASA and that, in due course, it will be selling its 3.93% shareholding in Norwegian," IAG said in a statement.
Norwegian, which has shaken up long-haul rivals by offering cut-price transatlantic fares, said in May it had received two conditional proposals for a full takeover from IAG, but had rejected them because they undervalued the company.
IAG CEO Willie Walsh last year ruled out launching a hostile takeover approach for Norwegian, and also said he wouldn't get drawn into a bidding war. In addition to Aer Lingus, IAG also owns British Airways, Iberia and Vueling.
A spokeswoman for IAG declined to give further details on the decision not to pursue Norwegian further, but said "we wish Norwegian every success in the future".
No Margin Of Error
"Norwegian's plans and strategy remain unchanged. The company's goal is to continue building a sustainable business to the benefit of its customers, employees and shareholders," Chairman Bjoern Kise said in a statement.
Norwegian has quickly built its long-haul route network, and in October overtook IAG's British Airways as the biggest non-US airline on transatlantic routes to and from the New York area.
But the Nordic carrier has had to take action to improve its financial position in recent months. In December, it announced a $230 million cost savings programme and refinanced one Boeing 787 Dreamliner as part of a series of steps it said would generate more than $30 million in liquidity.
"Norwegian's finances are already under pressure, and a share sale (by IAG) will put pressure on the stock, making it hard for them to raise money," analyst Per Hansen of brokerage Nordnet said in a note to clients.
"They no longer have any margin of error. If they were to need cash, and no alternative buyers emerge, the stock price could end up looking like a jetliner running out of fuel."