Spanish budget airline Vueling's board recently recommended to its shareholders to accept an improved takeover bid from International Airline Group. The unanimous recommendation was for the Eur9.25 per share offer for the airline.
IAG currently owns 45.85% of Vueling amongst others. The portfolio of the firm also owns shareholdings in British Airways and Iberia, the Spanish airline. IAG previously bid Eur7 per share but that offer was soundly rejected by the board.
In a notice sent to the Spanish stock exchange regulator, Vueling said, "The board of Vueling recommends shareholders to accept the improved offer for the following reasons: the price is reasonable and within the valuation issued by experts and from a strategic point of view the deeper integration of Vueling in IAG will offer advantages and opportunities."
IAG has become unpopular in Spain after its round of austerity measures imposed on Iberia to boost profit margins. The measures include laying off 3,000 workers as well as salary cuts to remaining personnel. With Vueling on board, it can increase its short distance capabilities and thus be able to become competitive against other budget airline operators.
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