Wow Air acquired by rival Icelandair

Since its founding in 2011, WOW Air has fought Icelandair, the country's flag carrier, for business to the island nation. That competition has officially come to a close. On Monday, Icelandair announced that it has agreed to acquire the up-start Icelandic ultra-low-cost carrier.

"Icelandair Group WOW air," the carrier said in a statement.

In the deal, WOW Air's shareholders will receive a 5.4% stake in Icelandair. Reuters values ​​the deal at $ 18 million. However, Bloomberg reports the WOW Air deal to be worth around $ 25 million, based on a $ 455 million valuation of Icelandair. WOW Air's shareholders will be able to provide an additional six-month moratorium.

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"Icelandair Group interim president and CEO Bogi Nils Bogason said in a statement. "There are many opportunities for synergies with the two companies but they will continue to operate under their own brands and operating approvals."

Led by founder and CEO Skuli Mogensen, WOW Air has become well-known among value-conscious travelers for its rock-bottoms and flashy fuschia jets.

The seven-year-old $ 55 and $ 70 trans-Atlantic flights.

"I am very proud of the success and development we have enjoyed in the past few years," Mogensen said in a statement. "We have created a strong team in North Atlantic."

However, in an internal email obtained by Bloomberg, Mogensen explained to his employees that it was part of the country for selling to the market.

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Both Icelandic airlines had been struggling this year, to slow down in Iceland, and increased low-cost competition. With the acquisition of WOW Air, the merged company would hold 3.8% of the trans-Atlantic market. However, the airlines will continue to operate as separate brands.

Icelandair operates a fleet of Boeing 737, 757, and 767 aircraft while WOW Air flies only Airbus A320 family and A330 family jets.

Icelandair's acquisition of WOW is still subject to approval from Icelandair Group's investors, Icelandic anti-trust authorities, and due diligence.