The IAG group reached an agreement with the Hidalgo family one month after the end of the negotiation period
After four years since the proposed acquisition of Air Europa by the IAG Group – to which Iberia belongs – was first announced, the operation has been cleared by both management committees.
Just one day before IAG presents its 2022 results to investors and analysts this Friday, the board of directors of Globalia (group of the Hidalgo family that owns Air Europa) has accepted the terms to close an operation that last years already the purchase of 20% of the airline for 100 million euros.
An operation that would have closed for about 500 million euros, half of what was announced in 2019, when the valuation was much higher without the impact on the accounts of the pandemic. The collapse of Air Europa was so great that it had to apply for a state bailout (SEPI) for 475 million euros in 2020.
The company explained in a statement that the deal involves the acquisition by IAG of the remaining 80% of Air Europa for €400 million. IAG had previously paid 100 million for 20% of Air Europa, so the total operation comes to 500 million euros for the company.
Upon receipt of the approval of the European competition authorities, the first payment of EUR 200 million will be made, of which EUR 100 million in cash and EUR 100 million in IAG shares (at the price set at the time of signing this agreement), giving Globalia a major shareholder of the IAG group.
The other two payments, of €100 million each, will be made on the first and second anniversary of the League’s approval, according to organization sources.
Of course, the agreement is subject to approval by the competition authorities, as well as the SEPI and the ICO. Likewise, it sets a fee of 50 million euros as a ‘breakup fee’ in case the acquisition does not go through. Until the above approval is obtained, both companies will continue to compete to date, they say from IAG.
“This operation strengthens the value of the company and demonstrates the solidity of the Air Europa project,” say the same sources, indicating that this news will have “big scope” for the promotion of the strategic ‘hub’ of Madrid-Barajas . . From IAG, they assure that the project will make it possible to consolidate the air connectivity offer between Europe and America, especially with Latin America and the Caribbean, where Air Europa has a wide network of destinations and a solid presence and recognition, making in turn, a strong link from America to Asia and the Middle East. “This will allow Spain to compete on an equal footing with other European connecting hubs and will contribute not only to accelerating economic development on both sides of the Atlantic, but also to the recovery of the tourism industry with the implementation of a new model, more innovative, sustainable and profitable”.
Jesús Nuño de La Rosa, CEO of Air Europa Holding, assured in a statement that the agreement with IAG “endorses the success of the plan implemented to consolidate Air Europa as an international reference post-pandemic, ensuring the viability and good demonstrating work before and after the biggest crisis in the aviation sector».
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
