TPG swoops on Iberia with $4.5 bln approach

By Sonya Dowsett

MADRID (Reuters) - Texas Pacific Group made a 3.4 billion euro ($4.5 billion) bid approach for Iberia on Friday, in a move which 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 finalising an $8.7 billion takeover of Australia's Qantas Airways Ltd..

It is also looking over the books of troubled Italian airline Alitalia.

Its cash approach at an indicated price of 3.6 euros per share was lower than Iberia's price of about 4 euros on Friday where the stock held firm, indicating 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 is up 27 percent in 10 sessions, buoyed on hopes that an "open skies" deal liberalising U.S.-European Union air travel will herald a round of mergers in the sector.

BA'S STAKE

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 earlier. "We await further news from the Iberia board."

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

Lufthansa declined to comment.

UK private equity firm Apax is considering making an offer for Iberia, sources familiar with the matter said.