=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SFGate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/n/a/2006/11/03/financial/= f052336S76.DTL --------------------------------------------------------------------- Friday, November 3, 2006 (AP) Aer Lingus Rejects Ryanair Takeover Bid By SHAWN POGATCHNIK, Associated Press Writer (11-03) 05:23 PST DUBLIN, Ireland (AP) -- Aer Lingus has formally rejected a takeover bid by rival airline Ryanair, telling shareholders in its defense document published Friday that the offer places a low value on the formerly state-controlled carrier. Ryanair Holdings PLC, Europe's fastest-growing airline, offered 2.80 eur= os ($3.57) a share for Aer Lingus Group PLC on Oct. 5, just days after its shares were floated on the Irish and British stock exchanges at 2.20 euros ($2.81) — or 27 percent less. But in a Dublin news conference formally rejecting the offer, Aer Lingus chiefs said the IPO had generated hundreds of millions for the previously cash-poor airline that would allow it to borrow heavily, buy new aircraft and rapidly expand its network, particularly into the United States. They said Ryanair — Europe's most rapidly expanding and ruthlessly cost-cutting airline — intended to gobble up Aer Lingus and create a near-monopoly on air travel in Ireland. "Ryanair, our principal short-haul competitor, has reacted in a hostile, anticompetitive manner designed to eliminate a rival at a derisory price," Aer Lingus Chairman John Sharman said in a statement accompanying the defense document. The defense document said a combined Ryanair-Aer Lingus operation would account for 80 percent of all flights between Ireland and other European countries. "Ryanair claims in its offer document that `because the two airlines will compete vigorously, this will not lead to a monopoly.' However, don't be fooled. Even Ryanair's founder and former chairman has admitted that the combination would be a monopoly," the document said, referring to Ryanair pioneer Tony Ryan, who launched the airline with a single route in 1985. The share price of Aer Lingus has remained firmly above Ryanair's 2.80 euros offer, in expectation that Ryanair will be forced to raise its price to secure more than 50 percent of shares, the minimum required for a takeover. Ryanair is legally barred from building its Aer Lingus holding, currently exceeding 19 percent, until the shares fall below its offer price again. Ryanair Chief Executive Michael O'Leary has insisted that he won't raise his bid — but concedes that a successful bid probably will require support from a share-ownership trust owned by 4,700 current and former Aer Lingus employees, who hold more than 11 percent of shares. Already ranged against the hostile takeover are the government, which retained a 25.4 percent holding; two investment funds operated on behalf of Aer Lingus pilots accounting for about 4 percent of shares; and Irish telecom tycoon Denis O'Brien, who bought 2.1 percent of shares explicitly to complicate Ryanair's move. The defense document poured scorn on O'Leary's sales pitch. "Ryanair's offer is ill-conceived, contradictory and anticompetitive," it said. "Ryanair has repeatedly contradicted itself when discussing the offer. Ryanair's opinions on strategy, management and unions are ill-conceived and misleading. Ryanair's offer would significantly reduce consumer choice." Ryanair said Friday the number of passengers it carried in October rose 23 percent. Total passenger numbers rose to 3.73 million compared with 3.03 million = in the same month in 2005, Ryanair said in a statement. The load factor — or the amount of capacity taken up by passengers and freight — was 83 percent in the same month compared with 85 percent in October 2005. Ryanair shares rose 0.5 percent to 8.97 euros ($11.44) on the Dublin Sto= ck Exchange. -----------------------------------------------------------------= ----- Copyright 2006 AP