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. Last Updated: 07/27/2016

Buyout Firm Offers $4.5Bln For Iberia

MADRID -- Texas Pacific Group made a 3.4 billion euro ($4.5 billion) bid approach for Iberia on Friday, in a development that analysts say could trigger other bids for the Spanish airline.

The private equity firm turned around Continental Airlines in the 1990s and is part of a group finalizing an $8.7 billion takeover of Australia's Qantas Airways. It is also looking over the books of troubled Italian airline Alitalia.

Its cash approach at an indicated price of 3.60 euros per share was lower than Iberia's price of about 4 euros on Friday. The stock held firm, indicating that shareholders expected other offers or TPG to increase its bid.

"It's an interesting combination. [TPG founder David] Bonderman really knows his stuff, and Iberia is a well-run airline. The main issue is whether it triggers expensive counterbids," Exane BNP Paribas analyst Nick van den Brul said.

Iberia's stock was up 27 percent in 10 sessions, buoyed by hopes that an open skies deal liberalizing U.S.-European Union air travel would herald a round of mergers in the sector.

British Airways, which owns 10 percent of Iberia, said it had appointed UBS to advise it on its options.

"The advice will examine all options, including a disposal of British Airways' holding," BA said in a statement.

BA's stake gives it a right of first refusal, putting it in a strong position to sink any bid.

If BA were to join TPG in a move on Iberia, it could help TPG sidestep limits on ownership of EU-based airlines by non-EU companies.

"We are aware of the Texas Pacific Group bid approach and that the Iberia board will be meeting in the next few days to discuss the matter," BA said. "We await further news from the Iberia board."

Another airline that might be interested is Germany's Lufthansa, Portuguese broker BPI said.

Lufthansa declined to comment.

British private equity firm Apax is considering making an offer for Iberia, sources familiar with the matter said. The London-based firm has considered bidding for Iberia in the past and is now looking at its options after the approach from Texas Pacific Group, the sources said.

Apax declined to comment.

A source close to TPG said Friday that it would continue to work on the bid for Alitalia.

TPG would not own the two airlines at the same time, sources familiar with the matter have said, and if it were able to buy one, it would withdraw from talks to buy the other.

Iberia carried 27.8 million passengers last year and has a leading 19 percent share of the Europe-Latin America market. It is increasingly focusing on this more profitable area, rather than on Spain and Europe, where it faces fierce competition.

Iberia said TPG would study its books for up to 30 days and could make a bid in the 10 days following that period.

"This approach does not constitute in any way an offer for all or part of Iberia's capital, nor does it create any legal obligation or binding agreement for TPG," Iberia said.

Iberia has hired investment banks Goldman Sachs and Morgan Stanley to advise on a possible sale, people familiar with the situation said Thursday.