SAS Share Trading Halted as Takeover Talk Grows

Trading of SAS AB's shares was halted in Stockholm on Sept. 12, 2008 as the company's share price rose quickly. The rise was fueled by growing speculation that a deal would soon be announced for Lufthansa to take over the poorly performing company, which owns Scandinavian Airlines. Credit: SAS Group

STOCKHOLM, Sweden (AP) — Scandinavian airline group SAS AB said Friday it was in talks about "structural possibilities" for the group but didn't comment on speculation that Germany's Lufthansa was considering a takeover bid.

The statement came an hour after the Stockholm stock exchange suspended trading in shares of the beleaguered airline group. SAS shares had risen more than 11 percent amid speculation regarding a deal with Lufthansa.

"Regarding today's speculations in the media, SAS confirms that it is in the process of evaluating various structural possibilities for the group," SAS said in a statement.

"Within this process SAS is conducting talks about a possible structural solution. It must be emphasized that no decision has been taken," it said.

Lufthansa declined to comment.

Glitnir analyst Mats Hyttinge said speculation over a Lufthansa bid for SAS has been around for a long time and that such combination could be logical. "I think it would be a good solution for SAS. They need financial backing," he said.

However, he noted that SAS' complicated ownership structure could be an obstacle, with the Swedish, Danish and Norwegian governments owning 50 percent of the shares.

"Considering there are several different states among the owners it would turn into a political process," he said.

Before the halt, SAS shares traded up 11.17 percent at 53.25 kronor ($7.80) in Stockholm. Lufthansa shares fell more than half a percent to 14.83 euros ($20.66).

Lufthansa looking for acquisitions

Lufthansa, Germany's biggest airline, has been looking at possible acquisitions. Just last month, it said it was in talks with the owner of Belgium's Brussels Airlines to take a 45 percent stake in the company, with an option to take it over fully later.

SAS has been hit in recent years by weak profitability, accidents, competition from budget airlines and strikes by pilots and cabin crew.

Last month the Stockholm-based company posted a second-quarter loss of 411 million kronor ($70 million), mainly because of high fuel costs. It also warned of job cuts and fleet reductions.

Also last month, a plane belonging to subsidiary Spanair crashed in Madrid, killing 154 of 172 people aboard.

In September 2007, two SAS turboprops crash-landed within three days due to landing gear problems, which triggered the airline to drop its entire fleet of turboprops. No one was seriously injured. It has since purchased new turboprops as part of a deal with aircraft maker Bombardier.

Hyttinge said the Swedish government has included SAS on its list of state-owned assets up for sale, while the Norwegian government has said it would rather buy more SAS shares.

In Denmark the signals have been mixed and a decision would probably depend on the price offered, he said.

The biggest private shareholder in SAS is Sweden's powerful Wallenberg family, which controls 7.4 percent of the shares. Other large shareholders include the National Bank of Denmark, Credit Suisse, JP Morgan, and three Swedish pension funds.

Associated Press writer Matt Moore in Frankfurt, Germany, contributed to this report.

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