International Airlines Group has announced it has agreed with Globalia to acquire the remaining 80 per cent of issued share capital of Air Europa (the ‘Acquisition’).
The consideration is €400 million, including €200 million upon closing, comprising €100 million in IAG ordinary shares1 and €100 million cash, followed by a further €100 million payable in cash on each of the first and second anniversaries of closing.
The Agreement is subject to regulatory and other approvals, which could take around 18 months.
This Agreement follows the conversion made by IAG on 16 August 2022 of a €100 million seven-year unsecured loan to Globalia into a 20 per cent equity stake in Air Europa.
Strategic rationale
The Board of IAG believes that the Acquisition remains strategically important for the Group and positions it to benefit from growth opportunities in the Latin America and Caribbean market, as well as to increase connectivity to Asia.
Upon completion, the benefits of the Acquisition include:
- Transforming IAG’s Madrid hub to compete with Europe’s largest hubs.
- Enhancing IAG’s position in the highly attractive Europe to Latin America and Caribbean market and enabling the company to open routes to new destinations in Asia.
- Delivering significant customer benefits by unlocking further network opportunities and providing access to IAG’s Avios loyalty scheme.
- Offering significant synergies, in line with those of previous acquisitions, to be delivered around 2026 to 2028 assuming closing in around 18 months.
IAG has a strong track record of maximising synergies from previous acquisitions.
Highlights
- On completion, the Air Europa brand will be retained under the management of Iberia.
- Closing is expected to take place in around 18 months following receipt of relevant approvals.
- Payment deferred until closing and one to two years post-closing.
- Limited impact expected on IAG’s financial leverage ratios.
Further strategic and financial information will be provided at a Capital Markets Day later in 2023.
54,064,575 shares based on the average trading price of IAG shares of €1.8496 on the Spanish Market in the five stock exchange sessions immediately prior to the date of the Agreement
Luis Gallego, IAG´s chief executive, said: “This agreement will enable IAG’s Madrid hub to compete on an equal footing with other European hubs and consolidate its position in the South Atlantic.
“Madrid is the main gateway between Latin America and Europe and there are opportunities to expand its network, providing significant benefits to our customers, employees and shareholders.”
