Air France-KLM has drafted in a pair of Spanish partners to launch an offer for Iberia, potentially spoiling a planned bid for the Spanish carrier from British Airways and private equity partner TPG.
Speculation has simmered for months that Air France-KLM could launch a rival bid for the company but it has revealed little. The carrier's plans are now well-advanced, according to Spanish press reports. The carrier has brought in Torreal, the investment firm controlled by Juan Abello, the Spanish billionaire who made his fortune when he sold his company to Vodafone, and Grupo Planeta, the publishing and media giant. An Air France spokeswoman declined to comment on the situation. She deferred to a statement put out by the company in July: "Spain is a one of the major markets and Iberia an important player in air transport. Taken in the perspective of much-needed consolidation for the efficiency and profitability of the air transport sector, it is therefore normal for it to be examined among others."
News of the progress of their plans comes just days before the group led by BA and TPG, the American buyout giant, are expected to launch a bid that value Iberia at as much as €3.4bn. The group is understood to have finished its due diligence and is now working on lining up a consortium of banks to finance the offer.
A firm offer has taken longer to materialise due to the upheaval in the global credit markets. "That's what is taking longer. The banks are being much more cautious," said a source close to the situation.
British Airways owns 10 per cent of Iberia, with first right of refusal for a further 20 per cent. The British carrier is a code share partner with Iberia and is hoping to maintain the same privileges under new ownership. In order to retain rights over its much sought-after routes to South America, Iberia must maintain its national flag carrier status.
In practical terms that means that is must be 51 per cent owned by Spanish investors. BA and TPG have brought in a trio of Spanish investors that would be the official owners of 51 per cent of Iberia if their bid is successful.
TPG had indicated earlier that it was willing to pay €3.60 per share for Iberia, valuing it at €3.4bn. Its share price has since fallen. It gained 5 per cent yesterday to close at €3.41, still below TPG's initial bid.