The Icelandair Group announced its intent to buy out WOW Air earlier this month, subject to approval by Icelandair shareholders and the Icelandic Competition Authority. This deal now seems to be in jeopardy.
Indeed, this Monday morning, the Iceland Stock Exchange temporarily halted trading on shares of Icelandair, by request of FME, the Financial Supervisory Authority, “to protect the equality of investors”, as reported by Icelandic news channel RUV.
Trading resumed at 12:30 after Icelandair Group issued a statement to the Icelandic Stock Exchange saying that they consider it unlikely that they will be able to fulfil all the conditions of the WOW air buyout before this Friday’s investors meeting called together to vote on the purchase.
Together, the two airlines control 80% of the air traffic to and from Iceland. Thus, the decision of the Icelandic Competition Authority will be critical for a conclusion of the takeover. Icelandair Group intended to keep the two airlines separate.
WOW air has recently struggled with significant financial losses. With the combination of the two airlines, WOW air may be able to add more destinations to its schedules, with the resources coming from Icelandair.
The Icelandair Group statement:
Icelandair Group Shareholders´ Meeting on November 30th 2018
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 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 company will continue to work on the transaction and the parties are continuing dialogue on next steps.