British Airways set to take over Aer Lingus after Ryanair accepted £1bn offer

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Ryanair has today accepted an offer for 29.8 per cent stake in the carrier
The deal was conditional on 90 per cent of shareholders voting in favour
IAG shares rose 2 per cent today and Ryanair's went up 2 per cent

Published: 05:55 EST, 10 July 2015 | Updated: 06:05 EST, 10 July 2015

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Ryanair has accepted an offer for its 29.8 per cent stake in Aer Lingus today, paving the way for British Airways owner International Airlines Group to take over the Irish operator.

The board of the low-cost carrier voted to accept the deal, stating that the IAG offer 'maximises Ryanair shareholder value'.

Ryanair was left as kingmaker in the deal after the 1.4 billion euro (£1 billion) offer was accepted by the Aer Lingus board and given the green light by the Irish government, owner of a quarter of the company, in May.

Ryanair has accepted an offer for 29.8 per cent stake in Aer Lingus today, paving the way for British Airways owner International Airlines Group to take over

The offer was conditional, however, on acceptance by at least 90 per cent of shareholders and there had been speculation that Ryanair might choose to 'play hardball' and force IAG to return to the table with a higher bid. IAG said it would not raise the terms.

The formal acceptance clears the path for the €1.3bn (£940 million) bid by BA and Iberia owner IAG for Aer Lingus to proceed.

There has been a complicated background to the transaction, created by the long-running battle fought by Ryanair against UK competition authorities, which have ordered it to cut its stake in Aer Lingus.

Ryanair has attempted to buy the Irish airline on three occasions, with plans to take over beginning in 2006, just after Aer Lingus was floated on the stock market by the Irish government.

Today, Ryanair chief executive Michael O'Leary said: 'We believe the IAG offer for Aer Lingus is a reasonable one in the current market and we plan to accept it, in the best interests of Ryanair shareholders.

Ryanair chief executive Michael O'Leary said the deal was reasonable and they plan to accept it in the best interests of Ryanair shareholders

'The price means that Ryanair will make a small profit on its investment in Aer Lingus over the past nine years.'

He said the offer was 'timely' because its original strategy of using Ryanair as a mid-priced brand to compete with flag carriers at major airports had been overtaken by its own Always Getting Better programme with a similar aim.

The revamp, also intended to improve its image and attract business customers, is credited with helping latest annual earnings soar by 66 per cent.

Ryanair will now vote in favour of the IAG offer at a meeting of Aer Lingus shareholders next Thursday.

IAG shares rose 2 per cent. Ryanair was also up 2 per cent.