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British Airways to Take Control of Caledonian

December 22, 1987|From Reuters

LONDON — British Airways said Monday that it had acquired a controlling stake in the money-losing airline British Caledonian, ending a six-month battle with Scandinavian Airlines System for ownership of carrier.

In a statement, BA said it had acquired 50.02% of British Caledonian shares, including those of British Caledonian's biggest shareholder, the 3i investment group, which had a 41% stake.

The British Airways bid valued British Caledonian at about $455 million (250 million pounds).

British Caledonian said in a statement that its board unanimously recommended to shareholders acceptance of BA's offer of $22.23 (12.15 pounds) per share for the entire company.

British Caledonian Chairman Sir Adam Thomson said, "In keeping with our commitment to shareholders, the board had no hesitation in accepting the BA offer of 250 million pounds."

BA had earlier made a cash offer valuing the company at $366 million (200 million pounds).

The BA and British Caledonian merger was approved last month by Britain's Trade and Industry Secretary Lord Young following advice from the Monopolies and Mergers Commission.

Thomson said the respective managements of BA and British Caledonian will begin discussions on the methods of implementing a merger between the two airlines.

Scandinavian Airlines System's $201-million (110 million pounds) offer for a 26% stake in British Caledonian had raised fears that British route licenses could pass into foreign hands.

SAS said in a separate statement that it had been contemplating making a revised offer itself but did not think it appropriate in the face of BA's bid.

Helge Lindberg, deputy president of SAS, said: "We knew from the outset it would be a terrific uphill battle. We were in a takeover situation across national borders in a heavily regulated industry, which was in itself a unique combination of circumstances."

SAS said it was faced with the restriction of bidding for only a part of British Caledonian in competition with BA's full bid.

British Airways Chairman Lord King said BA would urgently move to make British Caledonian into an efficient and profitable part of the new merged airline.

"British Airways has the financial, operational and marketing skills to turn British Caledonian around. Combining those skills with British Caledonian's considerable reputation for its standard of service based on the efforts of its staff will make a valuable contribution to our future success.

"If we had failed to grasp this opportunity for expansion across the British Caledonian route network, it might not arise again in the short- to medium-term future."

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