EasyJet Acquisition
Apollo Global Management Secures £5.7 Billion EasyJet Takeover, Board Recommends Deal
Key Points
Apollo said it would take 'all necessary steps' to satisfy EU local ownership rules.
Castlelake’s competing bid carried an August 3 deadline to lodge a formal offer and was priced at £6.90 per share, roughly £5.5 billion in value.
The easyJet board said the Apollo cash offer was at a level it would be minded to recommend and the decision was made unanimously, superseding the Castlelake approach.
Apollo has a firm offer deadline of 7 August to formalize its bid for easyJet.
At the time of the bid, Asian markets were mixed, with Japan’s Nikkei and Hong Kong’s Hang Seng up about 1% and South Korea’s Kospi up nearly 3%.
US private equity giant Apollo Global Management has agreed to buy easyJet for £7.15 per share, valuing the UK budget airline at roughly £5.7 billion, according to The Guardian. The all-cash offer carries an 81% premium to easyJet's pre-offer share price and a 22% premium to its previous closing price. The easyJet board said unanimously it would be minded to recommend the deal to shareholders.
The Apollo bid knocks out a rival offer from US firm Castlelake, which had been in the running with a £6.90-per-share proposal worth about £5.5 billion, reports Evening Standard. Apollo now has until August 7 to lodge a formal offer.
Apollo Beats Castlelake With Higher All-Cash Offer
Castlelake had set its own deadline of August 3 to file a formal bid, priced at £6.90 per share. But Apollo's £7.15-per-share offer topped that by 25 pence, and easyJet's board moved fast. The board said the Apollo offer was at a level it would recommend, and it dropped the Castlelake approach entirely, according to Sharecast.
The switch marks a sharp turn. easyJet had previously accepted a £6.5 billion offer from Castlelake before Apollo stepped in with a higher number. The board's unanimous decision signals it sees Apollo's bid as clearly better value for shareholders.
Shareholders Get Cash or a Stake in the New Deal
Under Apollo's terms, shareholders can take the full £7.15 in cash per share. But there is a second option: a Stub Equity Alternative. This lets investors roll their existing shares into Apollo's new ownership structure. Crucially, they keep their voting rights, reports CNBC.
This kind of structure is unusual in private equity buyouts. It gives long-term easyJet investors a way to stay in rather than cash out. Apollo said it supports easyJet's current strategy and plans to keep the existing management team in place.
Apollo Pledges to Clear EU Airline Ownership Rules
Buying a European airline creates a legal hurdle. EU rules require airlines to be majority-owned by EU nationals to keep their flying rights. Apollo said it would take "all necessary steps" to satisfy those local ownership requirements, according to The Guardian. The company has not yet detailed exactly how it plans to do this.
This is a key risk in the deal. easyJet flies across Europe and holds operating licenses that depend on EU ownership rules. How Apollo structures its ownership will be closely watched before the August 7 deadline.
easyJet Joins a Wave of UK Takeover Targets
The Apollo deal is part of a wider trend. Foreign buyers have been snapping up UK-listed companies at a fast pace, drawn by relatively low share prices after years of the UK market trading at a discount to US peers. easyJet's shares were seen as undervalued before the bidding war began, reports The Independent.
If Apollo's deal goes through, easyJet would shift from a publicly traded airline to a privately held one. That would reshape how the carrier makes decisions, raises money, and reports results. Shareholders now wait to see if a formal offer arrives before the August 7 cutoff.
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