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Topic: Vueling Rejects Take-over By IAG
Username: factsonly
Posted 2013-03-08 05:25:16 and read 7602 times.

According to financial documents filed by VUELING, the airline's Board is advising its shareholders to reject a take-over bid by IAG.


http://news.airwise.com/story/view/1362699777.html

Topic: RE: Vueling Rejects Take-over By IAG
Username: factsonly
Posted 2013-03-08 05:26:47 and read 7603 times.

And here is IAG's reaction:

International Airlines Group said it was considering its options over its proposed takeover of Vueling after the Spanish budget airline recommended shareholders reject IAG's offer.

The board of Vueling said on Thursday that IAG's €7 per share bid did not reflect the airline's true value.

"We will reflect on Vueling's announcement and provide an update in due course," an IAG spokeswoman said on Friday.

IAG, which already owns 45.85 percent of Vueling as well as British Airways and Iberia, offered in November to buy the rest of Barcelona-based Vueling in a bid to stem its losses in Spain and shake up its short-haul business in the country.

The offer represented a 28 percent premium at the time, but Vueling's share price has since soared as the low-cost carrier's market share in Spain has grown and it posted a 300 percent jump in 2012 net profit.

IAG said last month it had ruled out raising its bid for Vueling, although it could waive the initial condition it set of a minimum acceptance of 90 percent of non-IAG shareholders.

Vueling shareholders have until April 8 to say whether they will accept the offer.

source: IAG

Topic: RE: Vueling Rejects Take-over By IAG
Username: offloaded
Posted 2013-03-08 05:32:18 and read 7537 times.

That is interesting. I had a feeling IAG was keen to buy VY to offset the issues of IB operating shorthaul.

Topic: RE: Vueling Rejects Take-over By IAG
Username: acelanzarote
Posted 2013-03-08 05:47:57 and read 7451 times.

Which makes you wonder what may happen if IAG cannot buy Vueling out since
many have thought it could be a Iberia replacement in part/full....

Could this news give the Iberia Unions a push to hold out even more against
the IAG cuts....

interesting times ahead..

Topic: RE: Vueling Rejects Take-over By IAG
Username: clydenairways
Posted 2013-03-08 06:03:47 and read 7353 times.

Seems like the current shareholders are holding out for an improved offer from IAG.
Perhaps they see what future potential IAG may use Vueling for and are taking this into consideration to extract the best price for their shares.

Topic: RE: Vueling Rejects Take-over By IAG
Username: IrishAyes
Posted 2013-03-08 07:46:53 and read 7007 times.

Honestly, it seemed to me like IAG needed Vueling more than Vueling needed IAG. The situation with Iberia is a complete mess right now and perhaps VY was willing to get involved further until the situation resolves.

Topic: RE: Vueling Rejects Take-over By IAG
Username: LAXintl
Posted 2013-03-08 07:53:44 and read 6974 times.

Well with its stock trading at €8.14 today, of course why should the BoD accept mere €7.

IAG offer under values the company by almost 20% compared to the open market price.

Topic: RE: Vueling Rejects Take-over By IAG
Username: GCT64
Posted 2013-03-08 07:58:37 and read 6926 times.

Quoting factsonly (Reply 1):
The board of Vueling said on Thursday that IAG's €7 per share bid did not reflect the airline's true value.
Quoting factsonly (Reply 1):
IAG said last month it had ruled out raising its bid for Vueling
Quoting clydenairways (Reply 4):
Seems like the current shareholders are holding out for an improved offer from IAG.

   This is purely a negotiation about price. The board of VY did not say "we believe we have a better future and can deliver more value for the shareholders if we stay [pseudo-]independent" but that the "bid did not reflect the airline's true value" (= raise your bid). The board know that IAG wants to buy so are holding out for a better price, IAG knows that, unless they want to sell, their ~46% stake makes them the only realistic bidder.

Topic: RE: Vueling Rejects Take-over By IAG
Username: Bongodog1964
Posted 2013-03-08 08:18:27 and read 6838 times.

Quoting LAXintl (Reply 6):
Well with its stock trading at €8.14 today, of course why should the BoD accept mere €7.

IAG offer under values the company by almost 20% compared to the open market price.

IAG priced their bid at 28% over the share price back in November. The Speculators have decided that IAG will eventually offer more than 7 euros and have run the price up to 8.14. If IAG come back with a revised offer all well and good, if however they abandon their bid there's going to be some severly burnt speculators when the share price crashes back down with no other possible bidders.
Just remember that the market makers who today say that Vuelling is worth 8.14 said that it was worth not much more than 5.50 three months ago.

Topic: RE: Vueling Rejects Take-over By IAG
Username: LAXintl
Posted 2013-03-08 08:32:36 and read 6777 times.

That's fine, let the stock slip back if BA walks away. It also hurts BA.

At the end Vueling is a profitable enterprise and can be the masters of their own future.

I have never heard of companies accepting a lower bid price then whats on the open market ask price at the time of agreement. Frankly there would be shareholder rebellion and lawsuits if it was in the US.

Topic: RE: Vueling Rejects Take-over By IAG
Username: Bongodog1964
Posted 2013-03-08 08:45:26 and read 6715 times.

Quoting LAXintl (Reply 9):
I have never heard of companies accepting a lower bid price then whats on the open market ask price at the time of agreement. Frankly there would be shareholder rebellion and lawsuits if it was in the US.

The Vuelling directors are not in a position to accept or reject the IAG offer. Under European laws it has to go to a shareholder vote. The directors only duty is to make a recommendation to shareholders whether to accept or reject the offer. In this case they have recommended rejection. if they are carrying out their duties correctly, the recommendation is due to them either thinking that IAG will come back with a better offer, or that they feel that they can provide a better return to shareholders by staying independent.

You also have to see exactly what is behind this rapid increase in share value. If its on the back of a very limited number of shares being traded it might possibly be a false market, as an example if a block of 1000 shares comes on the market, their scarcity could push to price up. if however IAG sold their 45% holding the market would be awash with shares and the price would drop markedly.

Topic: RE: Vueling Rejects Take-over By IAG
Username: LAXintl
Posted 2013-03-08 08:58:46 and read 6653 times.

Don't know about European law, but under US law, BA could not simply dump its 45% shareholding either or use it as a threat.

It would either need to find a sideline party to take over its holding, or could only trade a limited amount of shares in a given time - for the expressed specific reason of not creating open market disturbance.
Frankly as I recall European exchanges also have restrictions like that, plus they have like the US limitations on daily per share movement before circuit breakers kick in and halt trading.

So certainly share price might have risen with investors knowing BA was involved, however at the end of the day its up to BA to come up with a price where shareholders earn a return on tendering their shares. Like I have said, I have never seen this be a value lower then the open market price.

Anyhow, life goes on for Vueling with or without BA. The company has been reorganized following the Click merger, and is a good enterprise that sits well positioned in the Spanish and European budget market.

Topic: RE: Vueling Rejects Take-over By IAG
Username: jumpjets
Posted 2013-03-08 09:27:51 and read 6546 times.

Quoting LAXintl (Reply 9):
That's fine, let the stock slip back if BA walks away[/quote

[quote=factsonly,reply=1]but Vueling's share price has since soared as the low-cost carrier's market share in Spain has grown and it posted a 300 percent jump in 2012 net profit.

A couple of observations.

Vuelings profits increased from 10.3m euro in 2011 to 28.3 million in 2012 on a turnover of 1.1BILLION Euro. So a great result for Vueling in staying profit given the state of the European economy - but profit in relation to turnover shows that year on year Vueling are barely breaking even. This in itself is highly unlikely to have caused a 48% increase in the share price in the last few weeks. Furthermore Vuelings previous quarterly announcements had delivered increased profits so the market would have been expecting the full year 'super results' and the price would have adjusted accordingly over the last few months.

It has to be concluded therefore that the 48% hike in the share price is more to do with speculators jumping on the bandwagon and hoping for an increased profit.

As we get nearer to the April deadline if there hasn't been an increase in the IAG offer it is possible that the share price will drop down towards its original market price which was well below the IAG offer. If that happens it is likely that speculators seeing themselves in a situation of having paid over the odds for shares will cut their losses and accept the offer - or at least that's probably what IAG are banking on.

Secondly let's not forget that IAG [not BA] own around 46% of the shares and can effectively prevent Vueling doing anything worthwhile if they wanted to be vindictive to a board of directors who didn't like their offer. What is more likely is that IAG will use their influence to direct Vueling in a direction that is most beneficial to IAG. Whilst this would be a lot easier with a majority holding a 46% holding gives them a hefty influence over the company.

Topic: RE: Vueling Rejects Take-over By IAG
Username: UALWN
Posted 2013-03-08 10:41:40 and read 6321 times.

Quoting jumpjets (Reply 12):
a 46% holding gives them a hefty influence over the company.

Yet IAG's influence is, apparently, not enough to steer the board of directors towards accepting the offer....

Topic: RE: Vueling Rejects Take-over By IAG
Username: LAXintl
Posted 2013-03-08 10:53:00 and read 6256 times.

Quoting jumpjets (Reply 12):
This in itself is highly unlikely to have caused a 48% increase in the share price in the last few weeks.

As economists say, stock pricing reflect the expected future potential of companies, not the past.

So I would also be upbeat about Vueling with or without a BA takeover.

Considering the abysmally situation of the European sector Vueling has done well and is well positioned to reap the benefits when the situation turns for the better especially in its home market.

Investors are attracted to stocks of companies they expect will earn a profit on in the future - so me thinks that is quite possible for them either via BA enriching its offer, or longer term as the company can outperforms many of its European colleagues.

Topic: RE: Vueling Rejects Take-over By IAG
Username: edina
Posted 2013-03-08 10:58:19 and read 6224 times.

Quoting LAXintl (Reply 14):

BA have little to do with Vueling....

IAG are the ones bidding, their original shareholding coming from Iberia starting Clickair, which subsequently merged with Vueling......

Topic: RE: Vueling Rejects Take-over By IAG
Username: LAXintl
Posted 2013-03-08 11:01:09 and read 6207 times.

Yes I meant IAG.
.
.
.
.

Topic: RE: Vueling Rejects Take-over By IAG
Username: by738
Posted 2013-03-08 11:36:41 and read 6074 times.

IAG have a habit of eventually getting what they want... I dont think this is the last we've heard of a Vueling IAG takeover

Topic: RE: Vueling Rejects Take-over By IAG
Username: Wingtips56
Posted 2013-03-08 14:43:41 and read 4825 times.

I think it just is simply a matter of price. Vueling's stock price and value have increased since IAG made the offer, so it's just a matter of offering more now, or wait to see if Vueling's stock price has been inflated due to the buy-out speculation and may come back down. It could be up to how much IAG is willing to gamble.

Are there other suitors that could acquire controlling interest, or is IAG safe to wait it out?

Topic: RE: Vueling Rejects Take-over By IAG
Username: bendewire
Posted 2013-03-08 15:38:25 and read 4491 times.

It will happen it is just a matter of time and share holders upping the price, so common in any take over scenario

Topic: RE: Vueling Rejects Take-over By IAG
Username: sankaps
Posted 2013-03-08 21:28:30 and read 3577 times.

Quoting LAXintl (Reply 14):
As economists say, stock pricing reflect the expected future potential of companies, not the past.

I think you are repeatedly missing the point being made that in any expected takeover situation, the stock price tends to get bid up by speculators and is therefore no longer purely based on fundamentals. Especially since the stock price started moving upwards only AFTER the IAG bid was made public, which was bound to happen as IAG big 28% over the market price at that time.

If IAG drops its bid, you can bet the stock price will come down again as there can be no other realistic bidder given IAG with 46% of the shares can fairly easly block other bids.

Topic: RE: Vueling Rejects Take-over By IAG
Username: LAXintl
Posted 2013-03-08 22:07:31 and read 3475 times.

Quoting sankaps (Reply 20):
I think you are repeatedly missing the point being made that in any expected takeover situation, the stock price tends to get bid up by speculators and is therefore no longer purely based on fundamentals.

Oh I understand very well.

But that is why one must offer high enough of a bid for the price not to be run out before the transaction closes.

Here is another similar situation today. Look at Dell here in the US. Michael Dell wants to take the company private again. In February he offered $13.65 per share about a 20% premium at the time. Price today is $14.18 and its looks like the deal is all but dead with lawsuit, and a shareholder rebellion. Even the board which he was cozy with him has now formally announced they are actively pursuing other offers as they know they could be burned at the stake legally for accepting to low offer from Mr. Dell.

Anyhow if IAG has not figured out that it often takes 2-3 offers before a deal is consummated. Sure IAG wants to spend as little as possible, while the BoD has its duty to extract maximum value for the shareholders.

Quoting sankaps (Reply 20):
If IAG drops its bid, you can bet the stock price will come down again

Certainly the stock might drop, but regardless the BoD can't give away the company responsibly for a price lower then the going market price unless if there are some extreme unique circumstances.

Here in the US there would be all types of lawsuits as a result if a board took such action.

Quoting sankaps (Reply 20):
given IAG with 46% of the shares can fairly easly block other bids.

It all depends on how the governance is structured and what voting power IAG might or might not have.

In reading a story, I am hardly impressed with IAG and their inability to even get a single BoD member to side with them on their offer. The Vueling BoD unanimously recommended to turn down the IAG bid.

Topic: RE: Vueling Rejects Take-over By IAG
Username: Bongodog1964
Posted 2013-03-09 00:24:54 and read 3139 times.

Laxintl - you keep posting to the effect that the board of directors could be sued for selling the company too cheaply, thereis no possibility of this as there has to be a shareholder vote. One vote per share.

Topic: RE: Vueling Rejects Take-over By IAG
Username: b2319
Posted 2013-03-09 00:37:19 and read 3101 times.

Quoting LAXintl (Reply 9):
Frankly there would be shareholder rebellion and lawsuits if it was in the US.
Quoting LAXintl (Reply 21):
Here in the US there would be all types of lawsuits as a result if a board took such action.

May I politely point out that neither IAG, nor Vueling, are based in the US?   

To bring back on topic, Vueling are well within their rights to refuse any takeover, for any reason. Having only flown IB a handful of times around 2006/7, I cannot think of another European carrier with similarly bad check-in and on-board service. Service levels alone would be a valid reason not to jump into bed with IB, via IAG, in my mind.

Also, strange the above concept may appear, on intra-Asia routes, I consider KA to be a much better carrier than CX.....

Cheers

B-2319

Topic: RE: Vueling Rejects Take-over By IAG
Username: BommerJan
Posted 2013-03-09 01:08:54 and read 2995 times.

Quoting b2319 (Reply 23):
Having only flown IB a handful of times around 2006/7, I cannot think of another European carrier with similarly bad check-in and on-board service.

Oh yes, and its name is VUELING  

Vueling staff refuse to take off old baggage tags at check in, gossip in Spanish about you expecting you not to understand what they are saying, refuse to sell you another drink ("we have one run"), their website only functions 50% of the time (as an LCC) and refuse to speak English with you if you so request (i.e. in post-flight customer survey, or when you call their toll-free number in Spain). On top of that their se atpitch is criminally short (I have checked everywhere on the web to find the number, but it is a well-kept secret). The only thing that works is: they are on time pretty much always.

Topic: RE: Vueling Rejects Take-over By IAG
Username: b2319
Posted 2013-03-09 01:17:55 and read 3054 times.

Well, I have never flown Vueling, so I cannot contest this. Maybe poor customer service is related to the underlying culture of the country, then? Maybe? A real question and not an attempt to troll....  

Having worked in Switzerland, and had colleagues calculate the 'cost to the company' when people arrived late, I am all for punctuality. To be honest, if I had no checked bagagge, I could deal with 100% punctuality and shitey service on every intra-Europe flight. That's just the kind of person I am.....

Cheers

B-2319

Topic: RE: Vueling Rejects Take-over By IAG
Username: LHRFlyer
Posted 2013-03-09 03:19:51 and read 2662 times.

Quoting UALWN (Reply 13):
Yet IAG's influence is, apparently, not enough to steer the board of directors towards accepting the offer....

As there is such an obvious conflict of interest, I expect IAG stayed out of any discussions by the board as to whether the offer should be expected.

Vueling supports ownership by IAG in a strategic sense, but it's hardly surprising they are pushing for a higher bid with the share price where it is.

Topic: RE: Vueling Rejects Take-over By IAG
Username: sankaps
Posted 2013-03-09 05:52:19 and read 2176 times.

Quoting LAXintl (Reply 21):
Certainly the stock might drop, but regardless the BoD can't give away the company responsibly for a price lower then the going market price unless if there are some extreme unique circumstances.

The going market price in a speculative run-up situation is meaningless unless there is a buyer willing to make a bid for it at that price. All IAG has to do is play the waiting game a bit and the price will come back down towards their bid price.

Topic: RE: Vueling Rejects Take-over By IAG
Username: par13del
Posted 2013-03-09 06:10:13 and read 2130 times.

Quoting jumpjets (Reply 12):
Secondly let's not forget that IAG [not BA] own around 46% of the shares and can effectively prevent Vueling doing anything worthwhile if they wanted to be vindictive to a board of directors who didn't like their offer. What is more likely is that IAG will use their influence to direct Vueling in a direction that is most beneficial to IAG. Whilst this would be a lot easier with a majority holding a 46% holding gives them a hefty influence over the company.

How does this work for Ryan Air and their recently failed take over bid, is the principle the same?

Quoting sankaps (Reply 27):
All IAG has to do is play the waiting game a bit and the price will come back down towards their bid price.

The question then would be if the drop in share price corresponds to a drop in the operations of the airline, pax being carried and profits or lack thereof being made.
If their operations are unaffected and they continue to make a profit the need to accept the lower IAG bis is????????????
Stock markets the world over are up it seems based on the US having a wider trade deficit and better than expected unemployment figures, does not mean that the financial crisis in the world is over, there is a disconnect between stock price and company operations.

Topic: RE: Vueling Rejects Take-over By IAG
Username: sankaps
Posted 2013-03-09 06:18:53 and read 2094 times.

Quoting par13del (Reply 28):
If their operations are unaffected and they continue to make a profit the need to accept the lower IAG bis is????????????

As stated earlier, the current price has a built-in speculation component to it (which is clear as the run up in price began as a result of the IAG bid), which has nothing to do with the fundamentals of the company. Over time this speculation component will decline as speculators lose patience and exit, and that will result in the price getting closer to fundamentals.

Topic: RE: Vueling Rejects Take-over By IAG
Username: par13del
Posted 2013-03-09 06:32:43 and read 2065 times.

Quoting sankaps (Reply 29):
and that will result in the price getting closer to fundamentals.

...and unless the fundamentals of the operations changes, the owners will still demand a premium over the market price of the shares since they are doing ok and the company is in demand by IAG. So if the share prices falls to the same level of the IAG offer and operations continue to be profitable, why exactly would they accept the IAG purchase at the same price, would they not be irresponsible for not demanding a premium / increase in price?

Yes there is speculation in the price of the share but there is a valid reason why, the company is in demand by a purchaser for what they are presently doing. If the purchaser wait the shareholders position will also harden and IAG will have to hope that the operational fortunes of the airline falls to such a position that their share value goes well below their offer thus making it a bargain. One problem, the current operations is what IAG is interested in, not the share price of the company, if that fails the need / desire to take over the airline goes away, they may as well stay with IB and fix that mess by itself.

Topic: RE: Vueling Rejects Take-over By IAG
Username: sankaps
Posted 2013-03-09 06:45:23 and read 2044 times.

Quoting par13del (Reply 30):
...and unless the fundamentals of the operations changes, the owners will still demand a premium over the market price of the shares since they are doing ok and the company is in demand by IAG.

You are ignoring the point that the IAG offer was 28% above the market price (which presumably reflected fundamentals) when the offer was made in Nov 2012. Vueling will have to demonstrate the fundamentals of the company have improved more than 28% of previous value since Nov 2012. At the end of the day it will be a negotiation, and the longer it takes, the more likely the price will self-correct at least partially.

Topic: RE: Vueling Rejects Take-over By IAG
Username: par13del
Posted 2013-03-09 10:03:12 and read 1865 times.

Quoting sankaps (Reply 31):
You are ignoring the point that the IAG offer was 28% above the market price (which presumably reflected fundamentals) when the offer was made in Nov 2012. Vueling will have to demonstrate the fundamentals of the company have improved more than 28% of previous value since Nov 2012.

Well IAG will have to ensure that they do something with IB to make them look less apealing, if IB does not improve the value of the product to be bought will only go up, the environment is not static.


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