EasyJet has officially accepted a £5.7 billion takeover bid from the US private equity firm Apollo Global Management. The airline’s decision follows the withdrawal of rival bidder Castlelake, paving the way for this strategic acquisition to proceed at a price of £7.15 per share.
Acquisition Details
The announcement came on Thursday, just one day prior to a deadline for final offers from potential bidders. EasyJet had initially signalled a preference for Castlelake’s bid, but with the latter’s exit, the airline quickly moved to solidify the deal with Apollo. This agreement not only ensures a smooth transition in ownership but also allows for existing shareholders, including founder Stelios Haji-Ioannou and his family, to retain a stake in the newly structured entity. Shareholders have the option to sell or transfer up to 49.9% of their shares.
To comply with EU regulations regarding foreign ownership of airlines, a special “EU Trust” shareholding group will maintain up to 5% of the airline’s shares, with Apollo’s ownership capped at 49.9%. This arrangement is intended to adhere to the European Union’s stringent rules governing airline ownership while enabling Apollo to exert significant influence over easyJet’s future direction.
Commitment to Future Growth
Apollo Global Management has expressed its commitment to preserving easyJet’s operational centres in the UK and EU. The firm has indicated that it will support the airline’s current strategies and work towards achieving sustainable, long-term growth. Alex van Hoek, Apollo’s European private equity lead, noted, “EasyJet is a leader in European aviation, having built a differentiated market position through its compelling customer proposition, expansive network and strong brand.” He emphasised the importance of easyJet’s role in enhancing connectivity for travellers across Europe and the UK.
In response to the agreement, easyJet’s chair, Stephen Hester, commented, “The easyJet board has carefully evaluated the proposal from Apollo alongside easyJet’s standalone prospects. While we remain confident in the strength of our business and the opportunities ahead, we believe this offer appropriately recognises the quality of the business we have built and delivers immediate, certain and attractive value for shareholders.”
Kenton Jarvis, the airline’s chief executive, also welcomed Apollo as a partner, underscoring their experience in the aviation sector as a substantial asset in advancing easyJet’s growth plans and continuing to provide value and service to customers.
Market Reaction
Following the announcement of Castlelake’s withdrawal, easyJet’s share price experienced an initial decline of 10%. However, with the news of the confirmed takeover by Apollo, shares rebounded, closing the day up by 3%. This volatility underscores the market’s sensitivity to acquisition news and the significant impact of investor sentiment on easyJet’s stock performance.
Why it Matters
This acquisition represents a pivotal moment for easyJet, positioning the airline for potential expansion and enhanced operational support under Apollo’s stewardship. The deal not only reflects the confidence in easyJet’s business model but also highlights the ongoing trend of consolidation in the airline industry, particularly among carriers seeking to strengthen their market position in an increasingly competitive environment. As the aviation sector continues to recover from the impacts of the pandemic, this takeover could be instrumental in shaping the future landscape of air travel in Europe.