Iberia and Air Europa have until the end of January to negotiate a new merger agreement
Almost 24 hours after announcing that they had broken the negotiations to merge Iberia and Air Europa, their two main companies, IAG and Globalia, they are given a new deadline to agree a different agreement for the integration of their two airlines.
Iberia and Globalia negotiate the termination of the purchase of Air Europa
"IAG has closed an agreement of intent with Globalia to evaluate, before the end of January 2022, other structures that may be interesting for both companies, offering similar benefits for their shareholders, customers and employees", the group has indicated to the Commission National Securities Market (CNMV).
They will continue negotiating despite the fact that they have considered "rescinded the agreement signed on November 4, 2019 and modified on January 20, 2021, according to which the IAG subsidiary, Iberia, had agreed to acquire the entire issued share capital of Air Europe". An agreement that two years ago happened because IAG paid 1,000 million euros and that months later, after the impact of Covid on the balance sheets, it was lowered to 500 million euros.
Indemnification for Globalia and disappointment at IAG
In addition, IAG has indicated that it will pay 75 million to Globalia for breaking these negotiations that have lasted almost two years. "In addition to the previously agreed 'break-fee' of 40 million euros", which was in the initial agreement, "IAG will pay Globalia 35 million euros. Both parties have agreed that these amounts will be applied to reduce any purchase price future if a new agreement is reached and to avoid any litigation related to the acquisition. "
“It is very disappointing that we had to terminate the current agreement to acquire Air Europa but the decision makes sense given market conditions, the deep crisis stemming from Covid-19 and considering our desire to maintain a disciplined approach to the allocation of capital ", indicates to the CNMV the CEO of IAG, Luis Gallego.
"However, we have committed to analyzing new alternatives with Globalia that could generate significant benefits. Likewise, we will continue working with the Spanish Government to guarantee the connectivity of Spain and the development of the Madrid hub," adds Gallego to the market supervisor. .
A merge with another structure
In parallel, Iberia assures that "it has been impossible to successfully close such a strategic operation for the future of Spain's air connectivity, the strengthening of the Madrid hub, the development of our quality tourism and the recovery of the Spanish economy", as indicated through a statement.
Iberia insists that it is evaluating alternatives and "other structures that may be interesting for both companies, offering similar benefits for its shareholders, customers and employees, before the end of January 2022."
At the same time, he affirms, "we will continue working with the Government of Spain to continue improving the country's connectivity and to continue strengthening the Madrid hub to make it competitive with other European airports".