Ryanair Drops London Listing Over Brexit Compliance Hassles
Irish discount carrier Ryanair Holdings Plc said it will drop its London Stock Exchange listing, becoming the first major company to blame its departure on Brexit.
The move confirms a plan set in motion earlier this month, when Ryanair cited compliance headaches tied to Britain’s exit from the European Union.
The region’s biggest low-cost airline has had to limit some stock purchases to ensure it’s controlled from within the EU, and then police investors who ran afoul of the guidelines. While trading volumes in London have dwindled, the company’s hasn’t managed to attract enough EU-based owners through its main listing in Dublin.
“As indicated at our interim results, and following subsequent shareholder engagement, Ryanair has decided to request the cancellation of London listing,” it said Friday in a statement. “The volume of trading of the shares on the London Stock Exchange does not justify the costs.”
Ryanair shares traded 2.7% lower as of 12:09 p.m. in Dublin. The stock is down 2.5% this year, though that’s still the best performance on the six-member Bloomberg EMEA Airlines Index, which averages a 14% decline.
While a number of companies have disappeared from the London stock market, Ryanair is the first to explicitly cite Brexit. Europe’s largest discount carrier has its largest operation at London Stansted, which won’t be affected.
Airline ownership rules set decades ago to protect the industry in Europe play a part in the move, adding a layer of complexity to the divorce that took effect at the start of this year.
EU-based carriers must be owned and controlled from within the bloc, and with Brexit, U.K. nationals don’t qualify anymore.
British Airways owner IAG SA, domiciled in Spain but listed in London, has also been wrestling with the requirement. The company is 25% owned by Qatar Airways and has a large number of U.S. investors. It created a new national entity for its Irish Aer Lingus arm with the Brexit split and has modified the structure of its Spanish units.
Three directors have also stepped down to give the board a majority of independent EU non-executive directors.
Ryanair Chief Executive Officer Michael O’Leary had previously suggested that IAG might need to be broken up to meet the rules.
EasyJet Plc, based in the U.K. and listed in London but with many flights between EU countries, said last year it would suspend the voting rights of shareholders from outside the bloc to reach majority EU ownership, while Wizz Air Holdings Plc, a mainly continental operator that also trades in London, said it would do likewise.
Even after taking several steps to limit non-EU ownership, just over one-third of Ryanair’s shares are held from member states, O’Leary told Bloomberg TV earlier this month. He said then that additional steps were needed to bring the total over 50%.
“It’s an inevitable consequence of Brexit,” he said. “We must be EU-owned and controlled, and delisting from London is a reasonably small initiative in that strategy.”
Brexit has put pressure on the LSE in other ways.
With U.K. equities trading at a discount to global indexes, London’s stock market is shrinking at one of the fastest paces among global listing centers. Cheap valuations have unleashed a flood of buybacks and encouraged a wave of acquisitions by foreign buyers and private equity houses.
A number of big-name companies are leaving the market, including BHP Group, the second-biggest stock on the U.K.’s FTSE 100 Index by market value. The mining giant is moving to a primary listing in Australia after collapsing a dual arrangement that dates back to the company’s creation two decades ago.
Brexit has also prompted British firms such as commercial landlord Hammerson Plc and warehouse group Segro Plc to seek secondary listings on EU exchanges to maintain access to the wider market.
Oil giant Royal Dutch Shell Plc and Unilever Plc, meanwhile, have bolted the Netherlands, ending dual headquarters arrangements to settle in the the U.K.
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