Yahoo Finance Lufthansa raises prospect of bidding war with British Airways owner for Norwegian Air
Lufthansa is in takeover discussions with Norwegian Air, raising the prospect it could go head-to-head with the owner of British Airways in a bidding war for the low-cost carrier.
Carsten Spohr, the chief executive of the German airline, said there was “a new wave of consolidation approaching” and Lufthansa was “in contact” with Norwegian.
Shares in debt-laden Norwegian rose about 10pc following Mr Spohr’s comments.
In April British Airways owner IAG acquired a 4.6pc stake in Norwegian and then made two separate takeover approaches, which were rejected. IAG has subsequently sat on the sidelines and chief executive Willie Walsh insisted that he would not make a hostile bid for the Norwegian.
Mr Spohr told German publication Sueddeutsche Zeitung that “in Europe, everyone is talking to everyone”. But he was more coy on whether Norwegian would be a good fit for Lufthansa.
“Takeovers are always a question of strategic value, the price and anti-trust,” he said. “There are no easy answers.”
Despite two months passing since IAG’s approach, Willie Walsh’s interest in Norwegian does not appear to have waned. Last week he told an aviation conference he was “watching” Norwegian and reasserted “it would be a good fit”; however he insisted this would only be “at the right price”.
With nearly £3bn of debt on its balance sheet, Mr Walsh said Norwegian has “the most stressed leverage balance sheet that you could see” and a tie-up with IAG could mitigate the risk Norwegian could “disappear” under a mammoth pile of loans and bonds.
Sources familiar with the conversations with Lufthansa were tight-lipped on the names of other parties Norwegian was talking to, but said: “They [IAG and Lufthansa] wouldn’t be interested in a company that is about to go bankrupt.”
Bernstein analyst Daniel Roseka said the purchase of Norwegian will be the biggest deal in the in the aviation sector over the next three years. ”IAG is the best suited candidate though,” he said.
The British Airways owner has a “more efficient connecting network”, which Norwegian could benefit from being a part of, Mr Roseka said.
He added: “Lufthansa will have a harder time driving synergies.”
A spokesman for Norwegian said: “Norwegian confirms that it has received enquiries from several parties following the IAG acquisition of 4.6pc of the shares in the company. These parties have expressed indicative and preliminary interest in share acquisitions, mergers, structured transactions, financing of the group and various forms of operational and financial cooperation.
“Norwegian believes that interest from several parties demonstrates the attractiveness of our business. Norwegian remains fully committed to delivering on its long-term strategy, for the benefit of the customers, employees and all shareholders.”
