Irish airline Aer Lingus has rejected a takeover bid from IAG, the parent company of British Airways, on Thursday saying that the offer undervalued its worth.
In a statement, Aer Lingus confirmed the rejection, considering the amount of media speculation the offer from International Consolidated Airlines Group (IAG) caused.
"The board has reviewed the proposal and believes it fundamentally undervalues Aer Lingus and its attractive prospects ... there can be no certainty that any offer will be made nor as to the terms of any offer. Shareholders are strongly advised to take no action," said Aer Lingus in a statement.
IAG - run by Willie Walsh, former chief executive of Aer Lingus - had offered to takeover Aer Lingus on 14 December for a reported $1.42 billion.
"International Consolidated Airlines Group notes the recent movement in the share price of Aer Lingus and confirms it submitted a proposal to make an offer for the company, which has been rejected by the board of Aer Lingus," said IAG in a statement.
The offer price wasn't mentioned by either party. However, the Financial Times cited people familiar with the matter as saying that the deal was valued at $1.42 billion.
Aer Lingus has become a potential takeover company as rival Ryanair, its biggest shareholder, is set to lose an appeal in a UK court to sell 29.9 percent stake in the company.
Ryanair has been asked to sell its stake in Aer Lingus by the UK competition authorities but Aer Lingus has been resisting it, according to The Financial Times.
If Ryanair decides to appeal in a higher court, the acquisition process could be delayed.
The Irish government owns 25 percent stake in Aer Lingus and said that it would be ready to sell its stake for the right price.
Other shareholders of Aer Lingus include UAE's national carrier Etihad, which holds 4 percent.
Experts say that the Aer Lingus takeover would be perfect for IAG.
"A takeover would fit from an IAG position, but the airline would have challenges if it returns with another bid: there could be regulatory concern or challenges from other airlines on competition grounds – but not a show-stopper. Aer Lingus has been successful even against a difficult economic climate in Ireland, and a deal would give IAG an even stronger network position at Heathrow," aviation analyst John Strickland told The Guardian.