Aer Lingus has formally rejected a takeover bid by rival airline Ryanair, telling shareholders in its defence document published Friday that the offer places a low value on the formerly state-controlled carrier.

Ryanair Holdings PLC, Europe's fastest-growing airline, offered 2.8 euros ($4.07 Cdn) a share for Aer Lingus Group PLC on Oct. 5, just days after its shares were floated on the Irish and British stock exchanges at 2.2 euros ($3.19 Cdn) — or 27 per cent less.

But in a Dublin news conference formally rejecting the offer, Aer Lingus chiefs said the IPO had generated hundreds of millions for the previously cash-poor airline that would allow it to borrow heavily, buy new aircraft and rapidly expand its network, particularly into the United States.

They said Ryanair — Europe's most rapidly expanding and ruthlessly cost-cutting airline —intended to gobble up Aer Lingus and create a near-monopoly on air travel in Ireland.

"Ryanair, our principal short-haul competitor, has reacted in a hostile, anticompetitive manner designed to eliminate a rival at a derisory price," Aer Lingus Chairman John Sharman said in a statement accompanying the defence document.

The defence document said a combined Ryanair-Aer Lingus operation would account for 80 per cent of all flights between Ireland and other European countries.

"Ryanair claims in its offer document that 'because the two airlines will compete vigorously, this will not lead to a monopoly.' However, don't be fooled. Even Ryanair's founder and former chairman has admitted that the combination would be a monopoly," the document said, referring to Ryanair pioneer Tony Ryan, who launched the airline with a single route in 1985.

The share price of Aer Lingus has remained firmly above Ryanair's 2.8-euro offer, in expectation that Ryanair will be forced to raise its price to secure more than 50 per cent of shares, the minimum required for a takeover. Ryanair is legally barred from building its Aer Lingus holding, currently exceeding 19 per cent, until the shares fall below its offer price again.

Ryanair CEO Michael O'Leary has insisted that he won't raise his bid — but concedes that a successful bid probably will require support from a share-ownership trust owned by 4,700 current and former Aer Lingus employees, who hold more than 11 per cent of shares.