The board of BA parent company IAG and the independent directors of the Aer Lingus Group have reached a cash agreement for the takeover of the Irish carrier.
The €1.4 billion deal would see Aer Lingus shareholders receive €2.55 per share.
A statement from IAG said the airline giant believes the acquisition of Aer Lingus has “a compelling strategic and financial rationale for the IAG Group at an attractive price for Aer Lingus Shareholders”.
As part of the deal, IAG has confirmed that Aer Lingus would continue to have its existing slots at Heathrow and will operate its current daily winter and summer schedule between Heathrow and Dublin, Cork and Shannon for at least seven years post-acquisition.
All routes will continue to operate under the Aer Lingus brand and keep Aer Lingus as its registered name.
Customers will get access to a larger network, particularly to the US, using Dublin as a hub for transatlantic routes.
In a statement IAG said the independent Aer Lingus Directors, who have been advised by Goldman Sachs International, consider the offer to be “fair and reasonable” and they unanimously intend to recommend the deal is accepted.
The government of Ireland has also backed the deal and the minister for finance for Ireland has confirmed he will look to dispose of his shares.
Willie Walsh, chief executive of IAG said: “Aer Lingus, Ireland and IAG would all benefit from this deal. “Aer Lingus would maintain control of its brand and operation while gaining strength as part of a profitable and sustainable airline group in an industry that’s consolidating.
“Ireland’s vital air links to Europe and North America would be enhanced, creating new jobs, with cast-iron guarantees on ownership of Aer Lingus’ Heathrow slots and their use on flights to Dublin, Cork and Shannon.
“Acquiring Aer Lingus would add a fourth competitive, cost effective airline to IAG, enabling us to develop our network using Dublin as a hub between the UK, continental Europe and North America, generating additional financial value for our shareholders.”
Colm Barrington, chairman of Aer Lingus said: “This is a compelling transaction for Aer Lingus, its shareholders, its employees, its customers and for Ireland.
“Shareholders will realise an attractive return through the premium that the IAG offer provides over the level of our share price immediately prior to the announcement of IAG’s offer.
“The company will reap the commercial and strategic benefits of being part of the much larger and globally diverse IAG Group and as a member of the oneworld alliance of 17 airlines that together carry over 500 million passengers.
“This access to greater global scale will accelerate growth across our network, enhance Ireland’s position as a natural gateway connecting Europe and North America, give Irish tourism access to major traffic flows and customer loyalty programmes and provide better access for business interests and to cargo flows.”