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Air New Zealand acquires 14.9% stake in Virgin Blue

21-Jan-2011 9:16 AM

Virgin Blue announced (20-Jan-2011) Air New Zealand has acquired a 14.9% stake in the airline for AUD145 million, cementing the recently approved trans-Tasman alliance between the two. The 14.9% is the maximum stake a foreign airline can buy without approvals from Australia's Foreign Investment Review Board (Australian Financial Review/Reuters/Bloomberg, 21-Jan-2011). Deutsche Bank acted on behalf of Air New Zealand, bidding at AUD0.51 cents per share, a 29% premium to yesterday's opening price. Air New Zealand CFO, Rob McDonald, says the cost of entry into Virgin Blue is was AUD145 million, AUD 44 cents per share. Air New Zealand CEO Rob Fyfe stated the purchase would not be followed by a takeover bid and he would not ask for a seat on Virgin Blue's board. The acquisition makes Air New Zealand Virgin Blue's second-largest shareholder behind the UK's Virgin Group, which holds a 26% stake. Under Australian law, only another 9% of Virgin Blue shares can be held by foreign entities.  [more]

Air New Zealand: "The investment in Virgin Blue is part of Air New Zealand's strategy to develop scale and reach in this region. The Tasman alliance with Virgin Blue was the first step in this strategy. This investment cements the emerging relationship between our two airlines and demonstrates the confidence we have in Virgin Blue both as an entity and as a partner for Air New Zealand," Rob Fyfe. CEO. Source: Company Statement, 20-Jan-2011.

Air New Zealand: "This is simply an investment in Virgin Blue that reinforces Air New Zealand's strategy to grow its business in Australasia which is continually evolving as a single aviation market. The Tasman alliance with Virgin Blue was a key step in this strategy ... The investment provides us with an interest in the number two airline in Australia and, through this, access to the opportunities in the growing Australian domestic market. Air New Zealand has no intention of entering the Australian domestic market in its own right." Rob Fyfe, CEO. Source: Stuff.co.nz, 20-Jan-2011.