The Irish government has agreed to sell its 25.1% stake in Aer Lingus to IAG for €1.4 billion ($1.52 billion), after accepting the airline group's third offer for the share in the Irish carrier.

The deal is now subject to approvals by the Irish legislature's lower house as well as Aer Lingus shareholders, says IAG.

“Aer Lingus, Ireland and IAG would all benefit from this deal. Aer Lingus would maintain control of its brand and operation while gaining strength as part of a profitable and sustainable airline group in an industry that’s consolidating," says IAG chief executive Willie Walsh. "Acquiring Aer Lingus would add a fourth competitive, cost effective airline to IAG, enabling us to develop our network using Dublin as a hub between the UK, continental Europe and North America."

IAG had offered to pay €2.55 for each share, comprising €2.50 for each share and a €0.05 cash dividend per share.

Aer Lingus chairman Colm Barrington says the deal is a "compelling transaction" for the airline. "The company will reap the commercial and strategic benefits of being part of the much larger and globally diverse IAG Group and as a member of the Oneworld alliance."

Under the deal, Aer Lingus will retain its slots at London Heathrow and keep its branding and location of incorporation in Ireland. It will also operate its existing daily scheduled operations between Heathrow and Dublin, Cork and Shannon for at least seven years following the acquisition.

Source: Cirium Dashboard