Apollo tops Castlelake bid for easyJet in UK takeover contest

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Apollo tops Castlelake easyJet bid

Highlights

Apollo tables a £5.7 billion offer for easyJet at £7.15 per share, nearly 4% above Castlelake's £5.5 billion proposal.
easyJet shares rise 14.3% to £6.72 as Apollo secures board support and signals intent to back current management and strategy.
Castlelake has until August 3 to raise its bid, with Apollo's formal offer deadline on August 7 amid shareholder concerns over valuation and European ownership rules.

Higher offer reshapes takeover timeline

As reported by Financial Times, Apollo has tabled a £5.7 billion offer for easyJet, three days after Castlelake secured the outline of its own deal, and the bid values the airline at £7.15 a share, nearly 4 per cent above Castlelake's £5.5 billion proposal.

The New York-based investment firm says it has followed easyJet for years and views it as a highly attractive aviation business with long-term growth potential. Apollo also wins provisional support from easyJet's board by backing the carrier's current management and strategy, while preserving the option for existing shareholders to participate in the deal.

Castlelake now has until August 3 to return with another offer, while Apollo faces an August 7 deadline to make a firm bid or walk away under UK takeover regulations. Market participants say the outcome may still depend on whether Castlelake is willing to raise its price again, with one person close to the process describing the situation as ultimately driven by valuation.

Shareholder pressure and strategic stakes

Investors welcome Apollo's intervention, even though some still argue easyJet is worth more than the latest terms imply. The shares close 14.3 per cent higher at £6.72 in London on Friday, while shareholders who had hoped for at least £7 a share now see a higher benchmark on the table.

Support from founder and largest shareholder Sir Stelios Haji-Ioannou remains a central issue for any final agreement. Apollo says it plans to keep in place the licensing arrangement that pays royalties tied to easyJet revenue, a move analysts describe as a clear effort to win over an influential figure in the deal.

Apollo also signals that it wants to develop, rather than split up, the business by supporting management and expanding easyJet Holidays into a more meaningful earnings stream. Both bidders still face the same structural hurdle of complying with European ownership rules that require 51 per cent of the airline's ownership and control to remain with European nationals.

Our earlier coverage of Apollo’s higher all-cash bid for easyJet explained how the £7.15-per-share approach moved the takeover talks ahead of Castlelake’s proposal and raised the valuation benchmark for shareholders. We also noted that easyJet’s European airport slots and Airbus order book, together with its post-pandemic share underperformance, were key factors underpinning investor focus on value and deal certainty.

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