British Airways may team up with private equity to make a joint bid for Iberia, a Spanish airline valued at €3.4 billion ($4.6 billion), with buyout firms TPG and Apax Partners currently the leading contenders.
British Airways, which already holds a 10 percent stake in Iberia, said in a statement yesterday that it may look to join a consortium bid for the Spanish airline, after a recent bid approach from TPG put Iberia into play.
The British airline said it had “approached a number of private equity companies about making a consortium offer for Iberia.”
TPG, whose interest in Iberia has already been made public, is one possible partner. A banking source said Apax was also interested in Iberia, but stressed that deliberations were at a very early stage and the firm may yet decide not to get involved in the bidding.
Any consortium would also be likely to include at least one Spanish company, the airline added.
BA said it would not consider an independent bid, and stressed that “any consortium bid would not involve further capital investment by BA.” This makes it likely that the airline would take a relatively small role in a private equity backed deal, with its partners possibly using BA to run the airline after the buyout.
Iberia revealed last month it had opened its books to a potential €3.60 per share bid from TPG. Analysts have suggested that this offer, which would value the airline at €3.4 billion, was deliberately pitched below the share price in anticipation of a bidding war.
BA’s competitors AirFrance and Lufthansa are also expected to show interest in the airline.
The Spanish airline has been struggling in the European market but it has highly profitable routes to Latin America. Iberia has been regarded as a takeover target since the US/EU “Open Skies accord” was agreed, allowing all EU airlines to fly from any airport in Europe to the US from 2008.
As well as its 10 percent stake, BA has an agreement with Iberia allowing the British airline first refusal to buy another 32 percent of the shares.
Iberia’s share price was unchanged at €3.97 at 10.39 GMT.