Lufthansa to take over BMI on 1 July after settling with Bishop

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German flag-carrier Lufthansa is finally to acquire a 50%, plus one share, stake in BMI on 1 July after reaching an out-of-court settlement with BMI chairman Sir Michael Bishop regarding the takeover agreement.

Lufthansa will pay £48 million ($79 million) for the shareholding, through a UK-based company, LHBD, in which the German airline will initially hold a 35% stake.

But it will also pay £175 million to cancel the controversial put option for the 50%, plus one share, stake in BMI which lay at the centre of the dispute.

Bishop's BBW Partnership currently holds the stake. While Lufthansa had been due to acquire this shareholding, it had argued that certain conditions in the original takeover deal had not been fulfilled.

BBW had claimed otherwise and subsequently aimed to force Lufthansa to proceed with the acquisition by starting legal proceedings at London's High Court.

Under the terms of the out-of-court settlement, Bishop has agreed that "specific performance of the put option will not be available", says Lufthansa, and that the German airline will technically "not be required" to take the shares.

But, in turn, Lufthansa will pay consideration of £175 million for the cancellation of the put option.

Lufthansa's takeover of BMI will be structured in a similar fashion to that of other airline acquisitions by the German carrier.

Once Lufthansa obtains necessary traffic rights it expects to raise its share of LHBD from 35% to 100%. This will give Lufthansa an 80% stake in BMI. The remaining 20% is still held by SAS Group.