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.