TPG-backed bid expected in a week as Iberia opens books

The TPG-BA consortium targeting Iberia has finally been granted access to the Spanish airline’s books and it plans to table an offer within a week. TPG is also back in talks with the Italian government for its stake in airline Alitalia, having dropped its bid in May.

A formal offer is likely to be tabled in about a week by the TPG and BA consortium planning a €3.4 billion ($4.7 billion) bid for Spanish airline Iberia. The airline board finally provided limited access to its books after months of prevarication.

Iberia’s board has taken several months to open its books since TPG first expressed an interest, in an attempt to flush out a rival bid which has not been forthcoming so far, said a banking source close to the bid.

“There was a fair bit of politics involved in the bidding process, with patriotism aroused by the threat of a national airline falling into foreign hands.” As the consortium has Spanish investors on board who intend to take over a 50 percent stake this was smoothed over.  Spanish investors Quercus, Ibersuizas and Banco Santander’s investment vehicle Vista Capital were revealed to be part of the consortium in May.

Separately, TPG is also in talks with the Italian government to table a bid for it stake in Alitalia. It had withdrawn from the bidding at the end of May, citing the restrictions placed by the government on any deal. Its consortium includes US buyout firm MatlinPatterson and Italian bank Mediobanca.

“TPG would need to close down loss-making routes, and the Italian government wants to tie the hands of any bidder to stop them doing so. Until the government budges, TPG won’t be able to come back into the deal as what is wants is inconsistent with the process as it is being run,” said another banker close to the bid. 

TPG also wants to hold negotiations with Alitalia’s trade unions ahead of any bid, added the banker.

TPG has been in conversations with the Italian government but only on the same terms and conditions as its previous bid. The government also wants Alitalia to be Italian owned for the next eight years. This was an issue for TPG when it originally dropped out of the bidding, as it had made its initial approach with only Mediobanca on board, according to a banking source at the time. It was told it could not change the structure of its bid accordingly.

Since then, a consortium led by Russian airline Aeroflot also pulled out of the bidding. The Italian government is believed to have reopened the bidding in an attempt to get a better price for the loss-making airline. The only consortium currently tabling a bid is one led by Italian construction group Gruppo Toto, which owns Air One, the Italian carrier.