EasyJet is moving toward a change of ownership after securing backing for a higher-priced offer that overtakes a rival proposal for the London-listed airline. The agreed in-principle terms value the company at £7.15 a share and position Apollo ahead of Castlelake, which had been pursuing a lower bid.
Highlights
- Apollo reaches an agreement in principle to acquire easyJet for £5.7bn in cash at £7.15 per share, surpassing Castlelake's £6.90-a-share offer.
- EasyJet's board signals support for Apollo’s deal, describing it as delivering better value for investors than Castlelake’s £5.5bn bid.
- Persistent share price weakness and underperformance versus Ryanair and IAG contribute to easyJet's attractiveness as a takeover target with its valuable European slots and Airbus order book.
Agreed offer overtakes rival bid
As reported by Financial Times, citing easyJet, the airline reaches an agreement in principle with Apollo on a cash offer of £7.15 per share, and its board is inclined to recommend the transaction to shareholders. The company says the proposed deal delivers a better outcome for investors than Castlelake’s latest £6.90-a-share proposal.Castlelake had been on course to take the carrier private in a £5.5bn transaction and had until August 3 to make a formal offer. EasyJet rejects four earlier approaches from Castlelake as undervaluing the business, but last month says it is willing to enter talks in search of a more attractive bid.
On Sunday, Castlelake and easyJet reach a preliminary agreement on a cash offer of £6.90 per share, valuing the airline’s equity at about £5.5bn on a fully diluted basis. Apollo’s £5.7bn agreement now supersedes that proposal with a higher valuation for shareholders.
Strategic value and market context
EasyJet has long been viewed as a potential takeover target because of its network of take-off and landing slots at major European airports and its large Airbus order book. The airline, founded as a low-cost alternative to British Airways, has built one of Europe’s largest route networks since coming to the London market in 2000.Its shares, however, continue to struggle to recover fully from the coronavirus pandemic, which grounds aviation in 2020. The stock also lags low-cost rival Ryanair and British Airways owner IAG, adding to pressure on the carrier’s market valuation.
Our earlier coverage tracked the intensifying bidding contest for easyJet as the carrier backed Apollo Global’s higher all-cash offer of £7.15 per share, topping Castlelake’s £6.90 proposal. We noted that the rival bids underline strong investor interest in aviation assets and place shareholder value and deal certainty at the center of the takeover process.
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