The much-discussed deal for Deutsche Lufthansa AG to acquire a minority stake in ITA Airways has been put on hold by Italy's Treasury due to a dispute over the agreed price, according to sources familiar with the matter. Initially, Lufthansa had secured EU antitrust approval in July to purchase a 41% stake in ITA Airways, the successor to the now-defunct Alitalia, for €325 million. This move was aimed at expanding Lufthansa's footprint in the competitive European aviation market.
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The Italian Treasury, however, has now resisted reducing the price Lufthansa is set to pay for ITA. The disagreement centers around a €10 million difference, which might seem minor in the grand scheme of the deal but has significant implications. An Italian source stated that the Treasury would not "undersell" ITA, indicating a firm stance on valuing the national carrier appropriately, especially considering its strategic importance in the southern European market.
Lufthansa's argument for a price adjustment stems from the financial performance of ITA in the fourth quarter, suggesting that the carrier's value might not justify the initial agreed-upon amount. This dispute comes at a time when the airline industry is still navigating through the aftermath of the global health crisis, with many carriers, including ITA, facing financial challenges. The delay in this transaction highlights the complexities of airline mergers and acquisitions, particularly when it involves national carriers with significant cultural and economic value to their home countries. The deal, if completed, was expected to not only bolster Lufthansa's network but also aid ITA in its recovery and growth, leveraging Lufthansa's operational expertise and market presence.
Lufthansa, on its part, has affirmed its commitment to the original agreement, stating that it has adhered to the terms set forth in the deal, including signing the necessary remedy package by the agreed deadline. This situation underscores the delicate balance between strategic business decisions and national interests, where financial valuations meet geopolitical considerations. The outcome of this negotiation could set a precedent for future airline deals in Europe, especially those involving state-owned or formerly state-supported entities like ITA. Both parties are expected to continue discussions, with the Italian government keen on ensuring that any deal reflects the true value and potential of ITA Airways.