Dáil Éireann - Volume 638 - 03 October, 2007
Written Answers. - Company Takeovers.
Deputy Olivia Mitchell Deputy Olivia Mitchell
Deputy Olivia Mitchell asked the Minister for Transport and the Marine his views on whether the State shareholding in Aer Lingus can prevent a takeover by airlines other than one seen as the main competitor by the European Commission; and if he will make a statement on the matter. [22054/07]
Deputy Noel Dempsey Deputy Noel Dempsey
Deputy Noel Dempsey: Mergers and takeovers are subject to regulatory constraints that are intended to ensure that competition is not reduced to the detriment of consumers. In cases where the turnover of the combined businesses would exceed specified thresholds the proposed merger must be notified to the European Commission for consideration in accordance with the EC Merger Regulation (Council Regulation No. 139/2004 on the control of concentrations between undertakings). Proposed mergers that do not exceed the prescribed thresholds a may be reviewed by national competition authorities. It follows that it is not only a proposed merger of principal competitors that may lead to consequences under applicable regulatory requirements although that is the instance that is likely  to give rise to the most significant competition issues.
Apart from the requirement to obtain regulatory clearance, any entity seeking to effect a takeover of Aer Lingus would have to acquire over 50% of the shares. Where the State’s shareholding of 25.4% is not available for purchase, this raises the significant practical difficulty of acquiring over two-thirds of the remaining shares in the Company. The task becomes more difficult and potentially impossible if other significant shareholders declare an unwillingness to sell.
A further consideration for any prospective acquiring entity is that even if it were possible to purchase a majority share but without the possibility of 100% of the shares being acquired, Aer Lingus would have to continue to operate on an independent financial basis and the rights of remaining minority shareholders would have to be respected. The acquiring entity could not integrate the Aer Lingus business operationally with another business nor extract its assets including cash. In effect therefore, the State’s retained shareholding of 25.4% of Aer Lingus provides a significant disincentive to hostile takeover attempts.
Dáil Éireann 638 Written Answers. Company Takeovers.