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Norwegian Air Says It Has `Very Serious' Suitors Beyond IAG

Updated on
  • Financial advisers hired as company softens hostility to bid
  • CEO Bjorn Kjos says ‘everything is for sale’ at right price
Kjos says everything’s for sale if the price is right.

Norwegian Air Shuttle ASA said it has attracted interest from other potential suitors since the revelation that British Airways parent IAG SA may bid for the company.

Norwegian received several inquiries after IAG disclosed that it was building a stake and might make a formal offer, it said in a statement Thursday, sending the stock 16 percent higher. Chief Executive Officer Bjorn Kjos told Bloomberg TV that the approaches come from “very serious, professional” airline groups.

In a softening of his stance on a takeover, Kjos announced the appointment of a steering committee and financial and legal advisers to handle the situation, adding that while the board may not back a deal at Norwegian’s current value, “there’s a saying that if the price is right, everything is for sale.”

The comments mark a shift from Kjos’s outright rejection of the overtures from IAG, whose CEO Willie Walsh he described as “one of the best guys in the industry.” The London-based group, which owns Spain’s Iberia, Aer Lingus of Ireland and discounter Vueling, as well as BA, said on April 12 it had bought 4.6 percent of the Nordic carrier’s shares and was weighing an offer for the rest.

Norwegian Air stock was trading 15 percent higher at 303.30 kroner as of 11:28 a.m. in Oslo, adding to a surge that followed IAG’s announcement and valuing the business at 13.4 billion kroner ($1.7 billion).

Price Driver

The additional inquiries disclosed by Norwegian “may not be as serious” as those from IAG, but could drive any acquisition price higher, Davy Holdings analyst Stephen Furlong said in a note to clients. Kjos said he’s happy to have IAG as an investor and intends to act in the best interests of all shareholders.

Norwegian has become a target as it grapples with a stretched balance sheet after splurging on the planes needed to compete with the likes of Ryanair Holdings Plc on European routes while establishing a pioneering discount operation in the trans-Atlantic market.

The company said that additional capital, including a share placing this quarter, is poised to “boost competitiveness and protect existing and future investments,” while confirming that a program of aircraft divestment will extend to as many as 140 jets, raising further funds.

Norwegian ordered 200 new-generation narrow-body jets in 2012, split equally between Boeing Co. and Airbus SE models, but plans to standardize it’s short-haul fleet around the U.S. company’s 737 and take only some of the European aircraft. That’s left 70 Airbus A320s free for sale before they’re even delivered, as well as older planes it no longer needs.

The Fornebu-based company’s operating loss swelled to 2.2 billion kroner in the first quarter, one the weakest periods for air travel, though the net loss narrowed to 46 million kroner following a financial gain from the reclassification of an investment in online bank Norwegian Finans Holding.

— With assistance by Francine Lacqua

(Updates with comments from CEO Kjos starting in second paragraph.)
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