Iberia merger talks

RNS Number : 1030A

British Airways PLC

29 July 2008

 

IBERIA MERGER TALKS

British Airways and Iberia are holding talks with a view to an all-share merger between the two companies. The negotiations are supported unanimously by the boards of both companies. 

The British Airways and Iberia brands would be retained as part of a combined group. 

Iberia's chairman and chief executive, Fernando Conte, said: 'A merger would be good news for our customers and enhance our existing relationship. We've worked together for nearly 10 years and a tie-up would build on that success. It would also strengthen the oneworld alliance and further develop Madrid's position as the European gateway to Latin America'.

British Airways' chief executive, Willie Walsh, said: 'The aviation landscape is changing and airline consolidation is long overdue. The combined balance sheet, anticipated synergies and network fit between the airlines make a merger an attractive proposition, particularly in the current economic environment. We've had a successful relationship with Iberia for a decade and are confident that both companies' shareholders would benefit from the proposed tie-up'.

British Airways acquired a nine per cent shareholding in Iberia in 1999 and has recently increased its shareholding to 13.15 per cent. Iberia has announced today that it has recently acquired a 2.99 per cent direct shareholding in British Airways and financial exposure to a further 6.99 per cent through contracts for difference linked to British Airways' share price. The airlines' shareholdings reinforce the mutual interest of both companies in each other. 

It is expected that it will take several months to reach agreement on the terms of the merger and to finalise a joint business and integration plan for the combined group. 

Both parties are confident of securing regulatory approval. The European Union has already granted British Airways and Iberia approval to co-operate widely.

ends

July 29, 2008 094/LG/08

Notes to Editors

 

1.         The principal shareholders in Iberia (other than British Airways) include Caja Madrid at 22.99 per cent of Iberia shares and El Corte Ingles at 3.37 per cent.

 

2.         It is expected that there will be a single holding company with a unified management structure built upon representation from both companies.

 

3.         The existing two companies would be responsible for the day to day running of their operations.

 4.         The new holding company is expected to be a member of the FTSE100 and quoted on the Madrid stock exchange.

 

5.         A contract for difference (CFD) is an agreement to exchange the difference in a share’s value between the time a contract is opened and the time it is closed. Holders of CFDs are financially exposed to the share price but do not own the shares and therefore have no voting rights. The contract has no fixed expiry date.

 

6          It is envisaged that a new company would acquire both British Airways and Iberia at the same time. Based on the current market capitalisations of British Airways and Iberia, the UK Panel on Takeovers and Mergers has agreed that the current intended transaction is not subject to the UK Takeover Code.

 

 

 

END

 

 

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