Portugal Signs Deal Selling 44.9% of TAP Air Portugal to Lufthansa

Lufthansa agreed to pay €1.025 billion for an initial minority stake. Completion still depends on regulatory approval, including from the European Commission.

Portugal and Lufthansa signed an agreement Tuesday for the German airline group to acquire an initial 44.9% stake in TAP Air Portugal for €1.025 billion. The transaction has not closed and still requires approval from the relevant authorities, including the European Commission.

The agreement was signed at Lisbon's Humberto Delgado Airport. Lufthansa said the investment would be financed entirely from its available liquidity.

Lufthansa's stake could increase to as much as 49.9% through the possible purchase of shares initially offered to employees. Including a ticking fee, the total purchase price could rise to as much as €1.2 billion, the company said.

The Portuguese state will retain 51% of the airline and a majority on its board, according to Euronews. Prime Minister Luís Montenegro said the deal was intended to preserve TAP's Portuguese identity and brand.

Lufthansa Chief Executive Carsten Spohr said the group plans to develop Lisbon into a hub while preserving TAP's identity. The company said its growth plans also include Porto, the Azores, Madeira and the Algarve.

The group sees TAP's network as a way to strengthen connections between Europe and Latin America, particularly Brazil. It also highlighted planned growth in links with Portuguese-speaking Africa and North America.

Completion will take place after the required regulatory approvals are received. The signing establishes the terms of the proposed acquisition; it does not mean TAP has already been integrated into Lufthansa Group.