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 Business News | October 2007 
Grupo Mexicana Says It Will Fight to Buy Aeromexico, Despite Antitrust Rejection
 Traci Carl - Associated Press
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Mexico City Mexicana airlines said Friday that opposition from Mexico's antitrust regulators will not stop its bid for rival carrier Aeromexico.
The Federal Competition Commission said Thursday it would not allow Mexicana to buy Aeromexico because it would give the combined company too much market dominance.
Grupo Mexicana de Aviacion SA de CV responded with a statement that it disagreed with the commission and planned to use the legal resources we have available to preserve our right to acquire the consortium Aeromexico.
The company argued that its bid was by far the highest, at around $200 million for the government's shares in Aeromexico, well above the next closest offer of $166 million from businessmen Moises Saba Masri and Alberto Saba Raffoul.
It also says that the combined companies would control only 53 percent of the domestic market, a figure that is expected to fall below 50 percent by the end of the year.
Grupo Mexicana insists that it is possible to consolidate both companies as Grupo Aeronautico, without affecting consumers, the statement said. To the contrary, it will foment competition in the national market and strengthen Mexican aviation in the international market.
Aeromexico is the country's largest carrier, and Mexicana is the second-biggest. The commission had previously ordered the two companies once both part of a state-controlled air transport consortium to be split and sold separately to increase domestic competition.
Mexicana was sold in 2005, but the government has since rejected bids for Aeromexico, complaining they were too low, and is only now offering to sell its 62 percent stake in the firm.
The two airlines dominated domestic traffic until a number of low-cost carriers were launched in recent years, boosting competition.
Aermomexico's shares fell 2.6 percent on the Mexico City stock market Friday in reaction to the news the competition commission would not allow the Mexicana bid. The announcement was made after the market closed on Thursday. |
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