Icelandair Group intended to buy its low-cost rival WOW air, but conditions set by a deadline of Friday may not be fulfilled.
The deal announced earlier this month in which Icelandair Group intends to buy its rival WOW air is now in danger of unravelling.
The Iceland Stock Exchange temporarily stopped trading in Icelandair shares on Monday on the request of the country’s Financial Supervisory Authority, “to protect the equality of investors”, as reported by the Icelandic news channel RUV and Aviation24.
Trading resumed when Icelandair Group issued a statement to the Icelandic Stock Exchange admitting it considered it unlikely it would be able to fulfil all of the conditions of the WOW air buyout before an investors’ meeting set for this Friday to vote on the deal.
“Icelandair Group has convened a shareholders meeting on November 30th. At the meeting, Icelandair Group’s shareholders will decide on whether the acquisition of WOW air hf. will be approved,” the statement reads.
“The share purchase agreement contains numerous conditions which will have to be fulfilled before the meeting. At this moment, Icelandair Group estimates that it is unlikely that all of the conditions will be fulfilled by that time.”
The statement concludes by saying that “the company will continue to work on the transaction and the parties are continuing dialogue on next steps”.
The deal is subject to the approval of the Icelandic Competition Authority, whose involvement is seen as critical. The two airlines’ combined share of air traffic to and from Iceland is almost 80%, so the buyout would give Icelandair Group almost monopolistic control of the country’s air transport. Icelandair says it intends to keep the two airlines as separate brands.
According to reports, the group would buy all of the shares in loss-making WOW for US$18 million, while the shareholders in WOW would receive the equivalent of 5.4% of Icelandair Group‘s shares after the transaction.