STOB11 Jan 2019 08:11
LONDON (Alliance News) - Stobart Group said on Friday it has agreed to purchase budget airline Flybe Group alongside Virgin Atlantic at a deeply discounted price.
A new joint venture between Stobart and Virgin will be called Connect Airways, with DLP Holdings also taking part. DLP is a Luxembourg-based company owned by funds managed by Cyrus Capital Partners. DLP will own 40% of Connect, and Stobart and Virgin 30% each.
Connect will pay 1 pence per share to Flybe shareholders, valuing the company GBP2.2 million. Flybe shares closed Thursday at 16.38p each, giving it a market capitalisation of GBP35.5 million.
The joint venture said the offer price comes after "careful" due diligence, taking into account Flybe's capital needs, its difficult trading environment, and prevailing market conditions.
As part of the deal, Connect will provide a GBP20 million bridge loan for Flybe's operational requirements. Further, once the acquisition is completed, the partners will provide up to GBP80 million of further funding.
As part of the purchase of Flybe, the Connect Air joint venture will buy Stobart's regional airline and aircraft leasing business Stobart Air for GBP40 million and fold it into the expanded operation.
Flybe has accepted the offer, Connect Air said, with its board "unanimously" recommending shareholders accept the offer.
Flybe Chief Executive Christine Ourmieres-Widener said: "The industry is suffering from higher fuel costs, currency fluctuations and significant uncertainties presented by Brexit."
Flybe shares drop 93% to 1.20 pence at the open in reaction to the agreed purchase price. Stobart shares were up 8.0%.
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