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IAG Raises Bid for Spain's Vueling

Source: Bloomberg - Wed 27th Mar 2013
IAG Raises Bid for Spain's Vueling

British Airways' parent company IAG has increased the value of its bid for Spain's Vueling Airlines by 32% and said it will settle for majority control after the discount carrier's board spurned an earlier approach.

IAG lifted the offer price to 9.25 per share from the initial 7, the London-based airline company said in a statement, adding that it's seeking 4.16% more stock to give a 50.01% holding, down from the earlier 90%.

IAG's proposal values the whole of Barcelona-based Vueling at 277 million.

Rafael Sanchez-Lozano, who has led Iberia since 2009, will be replaced by Luis Gallego, who heads discount unit Iberia Express and is a former Vueling chief operating officer.

Willie Walsh, IAG's chief executive officer, has made the takeover of Vueling central to an overhaul plan of its Spanish operations after the Madrid-based Iberia unit pushed the group to 23 million loss last year. Vueling would remain a standalone unit within Europe's 3rd-largest airline.

IAG's proposal values the whole of Barcelona-based Vueling at 277 million and comes hours after the company announced the exit of Iberia CEO Rafael Sanchez-Lozano, with immediate effect. The executive, who has led Iberia since 2009, will be replaced by Luis Gallego, who heads discount unit Iberia Express and is a former Vueling chief operating officer.

Shares of IAG fell as much as 3.1% and were trading 2.2% lower at 249.9 pence as of 3:40 p.m. in London.

Vueling shares were suspended prior to the announcement of the revised offer, having declined 0.7% to 8.42, 1.42 above the initial offer price and 83 cents below the level proposed today.

IAG also offered an extended acceptance period of 48 days, 9 more than previously.

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