Lufthansa’s offer for ITA increases…

PARIS (Agefi-Dow Jones) – A partial takeover offer was announced on Wednesday Lufthansa It marks the end of a long hiatus for European airline mergers and acquisitions (M&A) at ITA Airways.

Although the exact amount for the German company’s planned 40% stake in its Italian counterpart has not been disclosed, the memorandum of understanding currently being negotiated with Rome includes the option for Lufthansa to acquire the balance of the equity at a later date.
Credit analysts at Spread Research note that the move comes as a surprise because “the Italian government has previously expressed its intention to maintain its stake in ITA.”

They add that the estimated price of €200 million to €300 million for this initial capital investment “represents just 0.1 times Lufthansa’s gross operating surplus (Ebitda) over the last 12 months, which will have a limited impact on its balance sheet.

Lufthansa, which has revolved around two loss-making companies in the past, Swiss and Austrian Airlines, will have to prove it can do the same with its new target in a recovering medium-haul market that is still very competitive.

Despite the German group’s financial strength, analysts at Alliance Bernstein believe that “the success of ITA’s restructuring to become a profitable airline in the long term is far from certain.”

Remembering the repeated losses incurred by the former national company Alitalia over the decades.

A number of surveys were conducted on TAP

Industry experts also remain divided on whether the transaction will lead to a broader concentration drive.

Among the potential targets is TAP Air Portugal.

CEO Christine Ourmières-Widener said during a parliamentary hearing on Wednesday that the company, which will be renationalized urgently in 2020, is “ahead of some of the objectives” of the restructuring plan.

Although Lisbon announced his intention to proceed with partial or full sale of the company, the leader stressed that TAP now “needs stability”.

However, new strike notices have been issued by the TAP trade union for the end of January.

The group is also the target of several investigations by the Portuguese Court of Auditors, a parliamentary commission and the Attorney General’s Office.

These investigations are related to the financial conditions surrounding the departure of administrator Alexandra Reiss, who joined the socialist government as Secretary of State for Finance before stepping down from that role at the end of December 2022.

Therefore, the timing does not seem favorable for a change in control of the company.

Reluctance expressed by EasyJet

Scandinavian company SAS and its British low-cost rival easyJet are other possible targets, according to Kepler Cheuvreux analysts.

By holdingeasyJetLufthansa will “strengthen its competitive position in the UK, Paris-Orly and Geneva,” they explain.

But the British company recently felt that the M&A operation was “buying[ait] Although it is very difficult to succeed in Europe, most of the time.

For its part, SAS, which has been placed under American bankruptcy protection since the summer of last year, is far from completing its financial restructuring.

Michael O’Leary, managing director of an Irish low-cost airline Ryanaira table on the concentration he considers important at the end of the pandemic.

“TAP British Airways (group AI) and I believe easyJet will be acquired separately or jointly by British Airways Air Franceafter that, Lufthansa will buy Hungary’s Wizz Air,” he predicted on Tuesday.

According to him, air transport in Europe will become “a market where there will be four very large carriers, a bit like in North America”, which will increase the growth potential of Ryanair, Michael O’Leary.

-Yves-Marc Le Reour, L’Agefi. Ed: LBO

Agefi is the owner of Agefi-Dow Jones agency

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