EasyJet Accepts Apollo's £5.7 Billion Takeover Bid
US investor outbids rival, setting stage for potential airline industry shift and regulatory scrutiny.
Image: Matt Weston / AI
Callum Smith
EasyJet has accepted a takeover bid from US investor Apollo Global Management, valuing the airline at £5.7 billion.
Apollo's offer, standing at £7.15 per share, delivers a superior outcome for easyJet shareholders, providing a higher cash value than Castlelake's latest proposal.
This development follows easyJet's rejection of four earlier proposals from Castlelake; the airline asserted the firm attempted to acquire it 'on the cheap'.
Apollo faces a tight deadline, as it must announce a firm offer by August 7 or withdraw its bid entirely.
Castlelake, responsible for those earlier approaches, has until August 3 to formalise its own offer, further intensifying the competition for the airline.
Castlelake currently evaluates its options regarding a possible counter-offer, indicating a potential response in this high-stakes acquisition battle.
Apollo holds until August 7 to determine whether to proceed with a formal bid, as Aarin Chiekrie of Hargreaves Lansdown confirmed.
This potential acquisition marks a pivotal moment in the airline's history, which began with its founding in 1995 by Sir Stelios Haji-Ioannou.
The Haji-Ioannou family, including Sir Stelios, maintains over 15% ownership of easyJet, representing a substantial stake in the company.
Sir Stelios Haji-Ioannou was likely to accept an 'eye-watering' bid.
Beyond the immediate financial considerations, questions persist regarding European regulatory approval for the US-based Apollo bid.
Any such deal requires majority ownership within the continent, a key hurdle for the American firm.
Apollo stated it would undertake all necessary steps to meet any EU conditions surrounding the deal, directly addressing concerns about compliance and market access.
This strategic shift follows Apollo's established history in the aviation sector, having previously invested in Virgin Atlantic and Air France-KLM.
Such prior engagements demonstrate its experience within the industry.
The firm believes easyJet's existing strategy of evolving and strengthening the low-cost carrier model holds significant long-term growth potential.
This strategy includes upgauging the fleet, enhancing ancillary and loyalty offerings, and scaling holidays, according to Apollo's detailed assessment.
For stakeholders, private equity ownership will likely drive a sharp focus on cost reduction, meaning customers are unlikely to see ticket prices fall.
Companies often undergo significant change during takeovers, implying potential job cuts and higher ticket prices for easyJet.
However, for customers, new ownership is unlikely to translate into immediate changes, especially for those with existing bookings, according to Rhys Jones, Travel Expert at Go Compare.