Vueling Airbus A320. Courtesy photo

Vueling shareholders have been advised by the airline’s management not to accept the takeover offer from International Airlines Group (IAG) because it is undervalues the company.

Late last year, IAG announced it was planning to offer €7 ($9.12) per share to acquire the remaining 54.15% of Vueling not already owned by its subsidiary Iberia, which holds a 45.85% stake. IAG plans to retain Vueling as a separate operating company, with its own business model, maintaining its Barcelona base and existing management team.

“The board of Vueling understands that the majority integration into the IAG group would provide advantages and opportunities for the interests of the company,” a Vueling spokesperson said. “But it doesn’t recommend to shareholders to sell at a price of €7.”

Although the €7 per share offer was 28% higher than Vueling’s closing price Nov. 7, the price has since risen to €7.85 at the close of business March 7. Following the Vueling announcement, the share price spiked at €8.37.

An IAG spokesperson said, “We are reflecting on Vueling’s announcement and will provide an update in due course.”

The original IAG offer valued Vueling at €209 million.