Air France-KLM offers share swap option in TAP bid

Air France-KLM has included a share swap option in its binding offer for 44.9% of TAP, giving the Portuguese state the possibility of receiving shares in the Franco-Dutch airline group instead of cash, in whole or in part. The structure matters because it adds flexibility to the privatisation of Portugal’s flag carrier and could affect how the state values the deal.

Under the option, Portugal could exchange part or all of the sale proceeds for a stake in Air France-KLM, which it could later sell on the market or retain. Lufthansa’s proposal does not include that alternative.

The government of Prime Minister Luís Montenegro has viewed the Air France-KLM and Lufthansa offers as broadly close overall, despite differences in content, and has opened bilateral negotiations with both groups. The aim is to secure improved bids and choose a single candidate for final talks, although the government could still require the consideration to be paid entirely in cash.

The negotiations are expected to run until the end of September, followed by revised final offers and a new assessment by Parpública, the state holding company handling the process. ECO reported this week, citing a source close to the process, that the winner of the TAP privatisation is expected to be known in mid-October.

Originally published at Eco.pt