Connect has acquired Stobart’s regional airline and aircraft leasing business for £40million, and completed the purchase of Flybe for £2.8million. Both regional airlines will fly under the Virgin Atlantic brand.
Connect Airways, which is not really an airline but a consortium set up by Stobart Group Ltd (30%), Sir Richard Branson’s Virgin Atlantic Limited (30%) and New York-based hedge fund Cyrus Capital (40%), has on 21 February 2019 completed the acquisition of both Flybe Group PLC’s main trading assets and Stobart Air, as well as Propius, Stobart’s aircraft leasing business.
The deal must still be approved by Flybe’s shareholders. Following the sale of the assets, Flybe Group will become an empty shell company holding cash. This operation is subject to a 1penny-a-share offer by Connect, worth £2.2million.
At least one rival approach for Flybe was rejected: Arizona-based Mesa Air proposed an equity injection of £65million at a price of 4.5pence-a-share.
“The combination of Stobart Air and Propius with Connect Airways is expected to bring benefits to customers, suppliers and employees, providing stability in a tough trading environment,” said a Stobart’s statement delivered on Friday morning.
Connect Airways plans to use the Virgin Atlantic brand to operate a network of regional flights provided by both Flybe and Stobart Air.
Cyrus Capital is also taking a 4.65% interest in Stobart after agreeing to invest £24.7million.
Even if Flybe shareholders do not approve the sale, the company intends to delist from the London Stock Exchange and close down.
During the course of the takeover, Flybe’s largest individual shareholder Hosking Partners LLP and ex-CEO of Stobart Group Andrew Tinkler opposed the takeover, alleging an undervaluation of the carrier.