IAG (ICAG) stock rises as Air Europa purchase is terminated
By Neil Dennis
13:47, 16 December 2021
International Airlines Group, the owner of British Airways and Iberian Airlines, announced the termination of its agreement to buy Air Europa for €500m ($567m) from Spain’s Globalia Group.
IAG said on Wednesday that it was in advanced talks to end the deal, and officially confirmed in a press release sent to Capital.com that both parties had come to an understanding on Thursday to terminate the agreement.
Both companies will work together, said IAG chief executive Luis Gallego, to evaluate alternative structures that may be of interest to the two firms, while offering benefits for shareholders and customers.
IAG will pay a €35m termination fee, less than the €40m originally agreed, and any future purchase price, should a new agreement be reached, would be reduced by this amount.
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The initial agreement was signed in November 2019 when the entire equity of Globalia was valued at €1bn, but this was amended in January this year as market conditions deteriorated.
Gallego said: “It is very disappointing that we have had to terminate the current agreement to acquire Air Europa but the decision makes sense due to the market conditions, the deep crisis resulting from Covid-19 and taking into account our desire to maintain a disciplined approach to capital allocation.”
Stock in IAG rose 2.9% to 129.4p ($1.72) in mid-afternoon trade on the London Stock Exchange.