Last-minute turbulence nearly derailed the deal. But Lufthansa and the Italian government have finally overcome their differences over the final price of the sale of state-owned ITA Airways to the German airline giant.
“The final approval of the European Commission is confidently awaited to proceed with the completion of the transaction”stressed, on Monday night, November 11, the Italian Ministry of Economy, which announced that the agreements on the solutions to be sent to Brussels to guarantee competition were left on schedule, since the deadline set for the company in Germany and in Rome. for Monday at midnight.
The Italian Minister of Economy, Giancarlo Giorgetti, ended up signing the document negotiated with Brussels, which requested the transfer of a series of airport slots to other companies to safeguard competition.
The Italian State and Lufthansa had sealed an agreement in 2023 on the entry of the German group into the capital of ITA Airways, after years of unsuccessful searching for a buyer for its predecessor Alitalia. Under this agreement, Lufthansa intends to initially acquire a 41% minority stake in the Italian public company for 325 million euros, reserving the option to increase up to 100% in the medium term. “The anticipated economic conditions have not changed with respect to the agreement already signed” in May 2023, the Italian ministry said.
Lufthansa requested a discount to no avail
According to the Italian press, Lufthansa had requested, ultimately in vain, a discount of 10 million euros for the next phase that foresees the acquisition of an additional 49% for also 325 million euros. Taking advantage of the review clauses provided for in the marriage contract, Lufthansa would have invoked a loss in value of ITA Airways expected in the last quarter of 2024 to justify a price reduction.
Faced with the impasse over the sale price of ITA Airways, Giancarlo Giorgetti had refused a week earlier to sign the solution package destined for Brussels, unlike Lufthansa. When asked by reporters on Thursday about a possible summit with Lufthansa CEO Carsten Spohr, he responded: “that would be appropriate”.
In July, Brussels gave a first conditional green light to this union, asking the two companies to limit certain routes to preserve competition. The deadline for submitting the latest documents was first set for November 4 and then for November 11.
In January, the European Commission opened a “exhaustive investigation” on the operation, for fear of a possible reduction in competition on several short and long-haul routes originating and ending in Italy. The acquisition by Lufthansa should allow the German giant to expand its access to the Italian market, the third largest in the European Union, while providing ITA with a solid shareholder.
An approach riddled with obstacles
Brussels gave the green light for the ITA to take off in 2021 and authorized financing of 1,350 million euros in public funds, with the condition that it ultimately ends up standing on its own.
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The merger between Lufthansa and the Italian state airline has been plagued with obstacles. The final agreement concluded with ITA Airways comes after two failed attempts by Lufthansa to acquire a stake in Alitalia, in 2009 and 2019.
Once again a candidate alongside the Italian-Swiss shipping giant MSC in January 2022, the American investment fund Certares selected her for the position. The offer from Certares, associated with Air France-KLM and Delta Air Lines, was retained by former Prime Minister Mario Draghi for exclusive negotiations, before being rejected by his successor, Giorgia Meloni, in favor of Lufthansa.
The last obstacle was that the negotiations with the European Commission dragged on. Following the conditional authorization granted in July, Lufthansa and ITA Airways are now awaiting their final verdict.
