Apollo Global Management Launches $7.7 Billion Bid for EasyJet, Challenging Castlelake
Private equity firm Apollo has outbid Castlelake with a higher offer for the budget airline, potentially triggering a takeover battle.
Apollo Global Management has entered the fray for easyJet, launching a £5.7 billion ($7.7 billion) bid for the budget airline. This move directly challenges a previous offer from Castlelake, setting the stage for a potential bidding war for one of Europe's prominent carriers. EasyJet's board has indicated its support for Apollo's proposal of £7.15 per share, withdrawing its backing for Castlelake's £6.90 per share offer, which had been agreed in principle just days prior.
Apollo's bid, which must be formalized by early August, represents an aggressive attempt to secure control of the three-decade-old airline. The company's stock price has seen a significant decline, halving since the onset of the COVID-19 pandemic in 2020. Despite recent underperformance, market analysts believe the business holds substantial potential.
Castlelake stated it is currently evaluating its options regarding its possible offer. Shares in easyJet saw an increase of up to 16%, reaching their highest point since February 2022, although still below Apollo's offer price. Concerns among some investors persist regarding potential regulatory obstacles to any deal.
One easyJet investor noted that it was "reassuring that multiple private investors can see the undervaluation in the shares that public investors have seen for some time." Apollo plans to retain the easyJet brand and continue the existing licensing agreement with founder Stelios Haji-Ioannou's easyGroup. This approach may appeal to Haji-Ioannou, whose family is the largest shareholder with approximately a 15% stake and receives a royalty for the use of the "easy" brand.
Apollo has committed to undertaking all necessary steps to obtain merger control and EU subsidies-related clearances required for the acquisition. The investment firm also plans to keep the airline's key staff in place to continue its strategy of expanding capacity and growing its holidays business. The proposed cash offer, according to a joint statement from easyJet and Apollo, provides a superior outcome for shareholders by delivering a higher cash value compared to Castlelake's latest proposal.
Analysts highlight easyJet's extensive fleet of over 350 aircraft and its established business model as attractive assets. Castlelake, which first expressed interest in acquiring easyJet in May and was initially rebuffed, had its books opened by the airline in late June in an effort to solicit a higher offer. Castlelake has until August 3 to firm up its offer, while Apollo has until August 7.