A deal has been reached, SMB has sold his 50% stake to LH .
I am trying to find a link in English.
I am trying to find a link in English.
Well no link yet, here is the German link
http://www.faz.net/d/invest/meldung.aspx?id=87819047
Here is a 'loose' translation form the piece on Faz.net:
Funny, no mention in the BMI Media Center or on th LH press release pages.
Bishop talks with Lufthansa on the future structure of bmi
FRANKFURT (Dow Jones)- Deutsche Lufthansa AG, Frankfurt, currently in talks with the British airline British Midland plc (bmi) and its principal shareholder, Michael Bishop on the future structure of the airline. Michael Bishop on 10 October 2008 exercised an option, Lufthansa will undertake, 50% plus one share in bmi to acquire (the airline) Lufthansa announced on Wednesday. This option was part of a shareholder agreement.
Lufthansa expects that this option is not before 12 January 2009. (It) Will take effect in January 2009, it was further (stated).
Funny, no mention in the BMI Media Center or on th LH press release pages.
While expected, I think this is still a disaster for VS. The two should have merged years ago IMO, perhaps a case of two egos not thinking right? So, SMB gets £300m to retire with, perhaps not such a bad deal in the current climate, less that he may have got in a free auction a year ago. SRB gets no expansion at Heathrow where VS has stated its aim of focussing on.
It will be very interesting to see how LH manage BMI and what happens next:
- will they retain it as a separate brand and merge the back office
- will they rebrand it
- will they use BMI slots for a major transcontinental expansion from LHR
- does LH have the time to do anything major with all the other things it has on its hand (Brussels, Alitalia, Austrian etc.)
- will it allow United back into LHR as part of the Star Alliance
- will FlyBe be sold off
- how can BA react, LH and Air France-KLM are both now substantially larger
It will be very interesting to see how LH manage BMI and what happens next:
- will they retain it as a separate brand and merge the back office
- will they rebrand it
- will they use BMI slots for a major transcontinental expansion from LHR
- does LH have the time to do anything major with all the other things it has on its hand (Brussels, Alitalia, Austrian etc.)
- will it allow United back into LHR as part of the Star Alliance
- will FlyBe be sold off
- how can BA react, LH and Air France-KLM are both now substantially larger
There's a plane at JFK, to fly you back from far away
all those dark and frantic transatlantic miles
all those dark and frantic transatlantic miles
Originally posted by slinky09
While expected, I think this is still a disaster for VS. The two should have merged years ago IMO,
Perhaps the key sentence in the BBC story is:
Originally posted by slinky09
The German airline signed an agreement with Sir Michael back in 1989 that if he ever wanted to sell his BMI stake, it would have first refusal.
This would probably have pre-dated VS's interest in BMI.
FM
That is also the bit I found interesting:
I don't seem to recollect this being referred to during any of the publicity surrounding alleged interest in bmi by VS on the many occasions that was reported, very odd. [:?]
The German airline signed an agreement with Sir Michael back in 1989 that if he ever wanted to sell his BMI stake, it would have first refusal.
I don't seem to recollect this being referred to during any of the publicity surrounding alleged interest in bmi by VS on the many occasions that was reported, very odd. [:?]
Originally posted by slinky09
While expected, I think this is still a disaster for VS. The two should have merged years ago IMO, perhaps a case of two egos not thinking right? So, SMB gets £300m to retire with, perhaps not such a bad deal in the current climate, less that he may have got in a free auction a year ago. SRB gets no expansion at Heathrow where VS has stated its aim of focussing on.
It will be very interesting to see how LH manage BMI and what happens next:
- will they retain it as a separate brand and merge the back office
- will they rebrand it
- will they use BMI slots for a major transcontinental expansion from LHR
- does LH have the time to do anything major with all the other things it has on its hand (Brussels, Alitalia, Austrian etc.)
- will it allow United back into LHR as part of the Star Alliance
- will FlyBe be sold off
- how can BA react, LH and Air France-KLM are both now substantially larger
I thought United did fly out of LHR to DC, SFO, Denver etc.
Mark
I think that deal was struck in 1999 not 1989 ... there was also only a window for LH to exercise its option, it wasn't open ended and I think they had to do it by the end of next year. So while unlikely, there was always a chance for VS before or after or to have struck a deal with LH - mind you, at this price, to gain a reported £800m worth of slots, LH would have been mad to refuse. There's a more informative FT article here.
The danger now for VS is that it may lose feeder traffic from its relationship with BMI and that LH / Star Alliance becomes a very big bear in the woods at VS's home turf. Looks like all those 787s will have to fly from somewhere else ... especially if the third LHR runway proposals fail.
The danger now for VS is that it may lose feeder traffic from its relationship with BMI and that LH / Star Alliance becomes a very big bear in the woods at VS's home turf. Looks like all those 787s will have to fly from somewhere else ... especially if the third LHR runway proposals fail.
There's a plane at JFK, to fly you back from far away
all those dark and frantic transatlantic miles
all those dark and frantic transatlantic miles
I suspect Sir R has got other plans that he is keeping close to his chest for the time being. Or he is stashing his cash. It was mentioned he had a chest for taking advantage of what is at the moment bad times ahead but for every downturn there is an upturn, thats when you ride the wave just as it breaks..
The 1999 agreement was a put and call option agreement, whereby LH agreed that SMB could 'put' his 50% + 1 share onto LH for an agreed price and at the same time SMB agreed that LH could 'call' for that stake at another (no doubt, higher) price.
The time when the options could be exercised began about 18 months ago, IIRC, and would have had an end date (slinky09 says by end-2009), beyond which the options would expire. So, SMB was probably faced with being forced to exercise his 'put' option, otherwise he would have been left with his stake, worth less than £318m. This would be in with the knowledge that LH would be never exercise its call option at a higher price.
Whilst the LHR slots may be valued at £800m, the real value of this deal cannot be measured without knowing what BMI's balance sheet and P&L account look like. My best guess is that LH is buying itself a large slug of goodwill in this deal and therein may lie the answers to VS's approach. VS's shareholders probably think they will get a larger slice of a VS/LH/BMI pie after 12 Jan 2009 than they would have done by proposing a 3-way tie-up beforehand.
Sorry, speculating a lot now and beginning to drone on (as usual).
The time when the options could be exercised began about 18 months ago, IIRC, and would have had an end date (slinky09 says by end-2009), beyond which the options would expire. So, SMB was probably faced with being forced to exercise his 'put' option, otherwise he would have been left with his stake, worth less than £318m. This would be in with the knowledge that LH would be never exercise its call option at a higher price.
Whilst the LHR slots may be valued at £800m, the real value of this deal cannot be measured without knowing what BMI's balance sheet and P&L account look like. My best guess is that LH is buying itself a large slug of goodwill in this deal and therein may lie the answers to VS's approach. VS's shareholders probably think they will get a larger slice of a VS/LH/BMI pie after 12 Jan 2009 than they would have done by proposing a 3-way tie-up beforehand.
Sorry, speculating a lot now and beginning to drone on (as usual).
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