12/02/12, 12:15:09 EST

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BA to be part of group bidding for Spanish airline Iberia

earthtimes.org

LONDON: British Airways Plc revealed it is joining a consortium that is bidding for Spanish airline Iberia.

BA said in a statement it will be part of the consortium, led by private equity firm TPG Capital (formerly Texas Pacific Group) and comprising Vista Capital, Inversiones Ibersuizas and Quercus Equity, which will investigate a possible offer for Iberia.

The group has already made an indicative bid of 3.4 billion euros, or 3.60 euros per share, for the airline in March. This was before BA joined the group. Iberia, Europe's fourth largest airline, has not commented on the offer.

A spokesperson for BA said if the group is successful in its bid, the airline will remain in Spanish control and the Spanish investors would put in more than 50 per cent of the total capital investment. This is so because if it is not under Spanish control, it will have to renegotiate landing arrangements in Latin American countries, which are part of its important routes.

BA has a 10 per cent stake in Iberia and the right of first refusal offers for a further 30 per cent stake. Hence, its participation in the consortium is crucial. It, however, ruled out any further investment on its own in Iberia.

Meanwhile, Apax Partners, the British private equity fund, had floated another consortium to bid for the airline. The group includes Spain's Torreal, an investment unit of Spanish businessman Juan Abello, and Inversiones Hemisferio, which belongs to Jose Manuel Lara, who heads media conglomerate Grupo Planeta. However, there are reports that Apax had withdrawn from the consortium.

German carrier Lufthansa is also reported to be keen on Iberia and has indicated it may bid. However, it feels the airline is too costly for an acquisition.

A formal bid by the consortium led by Texas Pacific Group may happen only after a due diligence is over, which may take about three months, according to sources.

The airline industry in Europe is set for consolidation in the wake of the open skies agreement between the EU and the United States, which allows budget airlines to operate between Europe and the U.S.

 Printable Version  | published May 22, 2007