Flybe’s ultimatum to shareholders over controversial Virgin bid sends shares crashing
Flybe’s low-flying shares lost up to a quarter of their value this morning after the struggling airline’s board warned investors it would wind up the company if they do not approve an unpopular takeover.
Shares trimmed their losses to stand 18 per cent down at 2.59p as investors reacted to the ultimatum delivered after the market closed yesterday.
Read more: Flybe directors give shareholders ultimatum over takeover bid
Flybe hopes to sell up to a consortium bid from Virgin Atlantic, Stobart Group and US private equity firm Cyrus Capital for £2.2m, a deal that would give shareholders just a penny per share.
Investors have threatened legal action over the board’s move to accept the bid, but Flybe yesterday warned that shareholders would end up with nothing if they reject the approach.
“If the scheme is not approved, the Flybe directors intend to take steps to wind-up the company and shareholders are likely to receive no value for their shares in Flybe,” a statement warned.
“Accordingly, the Flybe directors believe that the terms of the acquisition remain in the best interests of Flybe shareholders as a whole and unanimously recommend that Flybe shareholders vote in favour of the resolutions to be proposed at the court meeting and the general meeting.”
Read more: Flybe to give shareholders chance to ditch chairman over Virgin offer
The shareholders’ vote is set for 4 March, but they will not get a say on a separate £2.8m sale of core assets to the consortium, with Flybe Limited and Flybe.com Limited set to be sold by 22 February.
Flybe’s chairman could be thrown out by investors over the Virgin bid in a vote pressed for by majority shareholder Hosking Partners, which wants to replace Simon Laffin with airline industry veteran Eric Kohn.