In a new interview with Norwegian business newspaper E24, the chairman of Norwegian Air Shuttle says the low-cost long-haul airline was in fact very close to being bought out by a mystery investor in late 2018 but the deal fell through at the last minute. The news comes just over a week after the European airline giant International Consolidated Airlines Group (IAG) confirmed it did not intend to make a new offer for Norwegian and that it would be selling off its remaining shares in the airline.
IAG made two bids for Norwegian after acquiring a 4.61% stake in the Oslo-based carrier in April 2018. At the time, Norwegian said the airline group had undervalued the company and spurned its approaches. It’s unclear whether the mystery investor that Bjørn Kise now talks about was a third offer from IAG or a totally different investor.
Previously, a number of potential suitors, including the Lufthansa Group have shown an interest in Norwegian. Since the deal fell through, Norwegian has apparently doubled down on a strategy to remain an independent company competing against the likes of Ryanair, easyJet and Wizz Air throughout Europe, while also taking on legacy airlines on long-haul intercontinental routes.
“The bid (to take over Norwegian) was, in isolation, good enough that the board should recommend moving on with it. We accepted the offer,” explained Bjørn Kise – not to be confused with Norwegian’s colourful chief executive, Bjorn Kjos.
Apparently the investor wanted things to move fast – the deal would have to be sealed by the end of 2018 to avoid interest from the competition authorities. But there was an issue – Norwegian had already embarked on a mission to raise vital equity to keep the company afloat. Then the investor started to stall. Kise says the company had to make a decision…
It couldn’t go ahead with selling shares in order to raise capital with a potential takeover in the works but at the same time the unnamed investor was stalling and Norwegian was running out of money. In the end, Norwegian had to pull out.
The decision came at the same time that Norwegian was batting off speculation that the airline was days away from insolvency. In fact, the airline always had a plan to raise extra equity but it couldn’t make those plans public.
“When you ask me if I’m disappointed. Yes, right away I was, but now I’m not. Maybe there will be a situation later where we say, “Thank God, we didn’t carry out that transaction.” It doesn’t have to be that long. We must remember that this provides opportunities in the future when the company stands alone and is not sold,” Kise tells E24.
So there you go – Norwegian really was in talks to be taken over and it actually came very close to doing just that. In the end, the deal fell through at the last minute and now the airline is going it alone. As it stands, Norwegian has recently raised around $350 million in additional equity and talks on a joint venture to lease out its fleet of aircraft continue.