Walsh cast doubt on Iberia deal
24.01.09
The proposed merger between British Airways and Iberia is under threat. BA's Chief Executive Willie Walsh has said that the current market valuations for the airlines were unacceptable, the Financial Times reports.
When the markets closed on Friday, the Spanish carrier's market value exceeding that of BA's for the first time since merger talks began last July. BA's relative valuation has been hit by a combination of a fall in its share price and the sharp decline of the pound against the euro.
Mr Walsh was quoted saying: ‘The present valuation is unacceptable. Our shareholders would not accept it.’ He went on to warn that he did not feel under any pressure to do a deal to create the third-largest European aviation group and he was prepared to walk away ‘if it made sense.’
When the merger talks began, the respective market capitalisations indicated a share exchange ratio of 65 percent for BA and 35 percent for Iberia, the FT said. This had fallen to only 49.6 percent for BA on Friday and 50.4 percent for Iberia.
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