Norwegian says it rejected two IAG takeover bids

May 4, 2018 by Pierre-Henry Deshayes
Norwegian's shares plunged nearly 10 percent on news of the takeover bid rejections

Low-cost airline Norwegian Air Shuttle said Friday it had turned the cold shoulder to two separate takeover bids by British Airways owner IAG, which recently acquired a 4.61 percent stake in the company.

"The board of Norwegian Air Shuttle (NAS) confirms that it has received two separate conditional proposals from IAG Group in relation to an acquisition of 100 percent of the share capital of NAS," it said in a statement.

"These proposals were reviewed in conjunction with NAS' financial and legal advisers, and were unanimously rejected on the basis that they undervalued NAS and its prospects."

In a presentation to investors on Friday, IAG said it "has had contact with the Norwegian board regarding a possible offer, without reaching an agreement."

The British company, which also owns Spanish airlines Iberia and Vueling, is now "considering its options", it said Friday as it reported a first quarter net profit of 794 million euros ($950 million), up from 57 million euros a year earlier.

The price of the Norwegian Air Shuttle share plunged by 9.9 percent on the Oslo stock exchange on Friday's news, though the price was still up more than 59 percent compared to a month ago.

Long-haul and low-cost

Speculation rose about a possible takeover of Norwegian, Europe's third-biggest low-cost company behind Ryanair and EasyJet, after IAG announced on April 12 that it had acquired the 4.61 percent stake.

On April 26, Norwegian said it had received "several inquiries" on the heels of IAG's flirt, but refused to disclose the courters' identities.

Norwegian is one of the few low-cost airlines to have ventured into long-haul flights, which has long been the preserve of major carriers, and has been rapidly adding routes.

But it is also heavily indebted and recently ran into financial turbulence in its bid to rapidly expand.

In March, it raised 1.3 billion Norwegian kroner (135 million euros, $161.3 million) in a private placement of shares in order to ease financial pressure.

Norwegian has ordered dozens of the latest fuel-efficient aircraft from Airbus and Boeing as part of its plans to expand in coming years and gain a cost edge against rivals.

It is planning to divest up to 140 aircraft by putting the newest ones into a leasing structure, which would free up cash, and sell some older ones once it receives newer models.

In the first quarter, Norwegian significantly cut its net loss to 46 million kroner against nearly 1.5 billion a year before, thanks to an exceptional capital gain.

The operating loss, however, rose to 2.2 billion against 1.7 billion in the first three months of 2017, while revenue climbed 33 percent to nearly 7 billion kroner.

Explore further: Norwegian chief says no plans to sell budget carrier

Related Stories

Recovering SAS orders 50 Airbus A320-neos

April 10, 2018

SAS said Tuesday it had ordered 50 Airbus A320-neos for its short and medium-haul routes, a sign of improving fortunes for the Scandinavian carrier after some difficult years.

Transatlantic test for Airbus low-cost airliner

February 13, 2018

The long-range version of Airbus's updated single-aisle aircraft took off Tuesday on a flight from Paris to New York in what could be a boon for low-cost flights across the Atlantic.

Recommended for you

Paleontologists report world's biggest Tyrannosaurus rex

March 22, 2019

University of Alberta paleontologists have just reported the world's biggest Tyrannosaurus rex and the largest dinosaur skeleton ever found in Canada. The 13-metre-long T. rex, nicknamed "Scotty," lived in prehistoric Saskatchewan ...

NASA instruments image fireball over Bering Sea

March 22, 2019

On Dec. 18, 2018, a large "fireball—the term used for exceptionally bright meteors that are visible over a wide area—exploded about 16 miles (26 kilometers) above the Bering Sea. The explosion unleashed an estimated 173 ...


Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.