Icelandair Group has agreed to acquire the entire share capital of its budget rival Wow Air.

The group says the share purchase agreement is subject to shareholder approval.

Icelandair Group states that Wow Air shareholders will receive the equivalent of 5.4% of the group’s shares after the transaction.

It states that the two companies will continue to operate under separate brands. The carriers have around a 3.8% combined share of the transatlantic market.

“The acquisition creates opportunity for both companies to become even better prepared to provide international carriers with strong competition in the international airline market,” says Icelandair Group.

The group’s interim chief, Bogi Nils Bogason, says the two sides have “many opportunities for synergies”.

Wow Air chief Skuli Mogensen, who founded the budget airline, says the carrier will have an “opportunity to grow and prosper” with Icelandair Group as its “strong backer”.

Source: Cirium Dashboard