British Airways Parent IAG Raises Bid for Spain’s Vueling

British Airways parent IAG increased the value of its bid for Spain’s Vueling Airlines SA by 32 percent and said it will settle for majority control after the discount carrier’s board spurned an earlier approach.

IAG lifted the offer price to 9.25 euros per share from 7 euros, the London-based company said in a statement, adding that it’s seeking a minimum 4.16 percent more stock to gain at least a 50.01 percent holding, down from the earlier 90 percent.

Willie Walsh, IAG’s chief executive officer, has made the takeover of Vueling central to an overhaul plan of its Spanish operations after the Madrid-based Iberia unit pushed the group to a 23 million-euro ($29 million) loss last year. Vueling would remain a standalone unit within Europe’s third-largest airline.

“The higher price and lower level of minimum acceptances suggest a high likelihood of completion,” said James Hollins, an analyst at Investec in London with a “buy” rating on IAG stock. “With expected synergies driving a projected earnings enhancement, we would take the deal positively if completed.”

Vueling shares that had been trading 20 percent above the initial offer price before today rose a further 9 percent to close at 9.24 euros in Madrid. Shares of IAG, as International Consolidated Airlines Group SA is known, fell 2.3 percent.

IAG’s proposal values the whole of Barcelona-based Vueling at 277 million euros and came hours after the company announced the exit of Iberia CEO Rafael Sanchez-Lozano, with immediate effect. The executive, who has led Iberia since 2009, will be replaced by Luis Gallego, who heads discount unit Iberia Express and is a former Vueling chief operating officer.

IAG also offered an extended acceptance period of 48 days, nine more than previously.