Aer Lingus Group plc (“Aer Lingus”)
Ryanair Holdings plc (“Ryanair”)
On 4 December 2008 Ryanair issued an announcement (“the Announcement”) setting out certain undertakings in respect of its proposed offer for Aer Lingus. This information had been disclosed at a meeting with the Minister for Transport on 3 December. These undertakings were not set out in Ryanair’s Rule 2.5 announcement released on 1 December.
The Panel has considered these undertakings (the headings of which are reproduced in the attached Appendix) in the context of Rule 16 of the Irish Takeover Panel Act, 1997 Takeover Rules, 2007 to 2008 (“Rules”) and General Principle 1 of the Irish Takeover Panel Act 1997, as amended (“Act”).
The Panel’s statutory function is inter alia to monitor and supervise takeovers so as to ensure compliance with the General Principles and the Rules. General Principle 1 states inter alia that all holders of the securities of an offeree of the same class must be afforded equivalent treatment. Rule 16, which deals with special arrangements with favourable terms, states inter alia that except with Panel consent, neither an offeror nor any person acting in concert with it may during an offer period make any arrangement with any offeree shareholder which involves a dealing in, or acceptance of an offer for, or otherwise relates to, offeree shares, if there would be attached to such arrangement a term favourable to such shareholder or any other person which is not being extended under the offer to all offeree shareholders.
The Panel has ruled that the making by Ryanair of arrangements as described in paragraphs C, D and E of the Announcement would constitute a breach of Rule 16 and General Principle 1 as they would constitute arrangements with an Aer Lingus shareholder containing favourable terms which were not being extended to all Aer Lingus shareholders (the Irish Government through the Minister for Finance holds a 25.1% shareholding in Aer Lingus). Consequently, the Panel has given a direction pursuant to section 9(2) of the Act to Ryanair prohibiting it from extending these undertakings under its proposed offer for Aer Lingus or from making arrangements with any shareholder of Aer Lingus in respect of these undertakings at any time when Rule 16 and/or General Principle 1 is applicable.
With regard to the undertakings described in paragraphs A and B of the Announcement, while it is not clear from the Announcement whether an arrangement is contemplated with any Aer Lingus shareholder, the Panel has directed Ryanair not to extend these undertakings under its proposed offer for Aer Lingus unless:
(i) it is clear to whom the commitments are being given;
(ii) they are in compliance with Rule 16 and General Principle 1;
(iii) Ryanair and its advisers are satisfied that Rule 19.1 (standards of care) is complied with; and
(iv) Ryanair and its advisers have consulted the Panel if there is any doubt whether the commitments would constitute an arrangement prohibited under Rule 16 and/or General Principle 1.
The Panel has further directed Ryanair (i) not to enter into arrangements with any shareholder of Aer Lingus in respect of the undertakings described in paragraphs A and B of the Announcement in breach of Rule 16 and/or General Principle 1; and (ii) if there is any doubt whether any such arrangements would be in breach of Rule 16 and/or General Principle 1, to consult the Panel.
12 December 2008
Appendix
A Recognise the Trade Unions in Aer Lingus.
B Shannon – Heathrow connectivity will be restored.
C Government will be given control over London Heathrow slots.
D Ryanair will provide €100 million bank guarantee that Aer Lingus’ short haul fares will be reduced by a minimum of 5% for a three year period.
E Ryanair will provide an additional €100 million bank guarantee that Aer Lingus’ fuel surcharges will be eliminated in their entirety (for all new bookings) within 28 days of completion of the Offer.
