Apollo Global Management to Acquire EasyJet in $5.7 Billion Deal
Private equity firm Apollo has reached an agreement to take over the budget airline, ending a protracted bidding war after rival Castlelake withdrew its offer.
EasyJet has accepted a takeover offer from private equity firm Apollo Global Management in a deal valued at £5.7 billion. The agreement concludes a lengthy bidding competition for the budget airline.
Castlelake, another U.S. firm that had submitted multiple bids, withdrew from the race after its deadline to present a higher offer passed. Apollo's proposal of £7.15 per share was subsequently accepted by EasyJet.
Kenton Jarvis, chief executive of EasyJet, expressed confidence in Apollo as a partner, citing the firm's experience in the aviation sector. "I believe Apollo's 'experience in the aviation sector makes it a strong partner for easyJet as we accelerate our growth plans and continue to deliver great value and service for our customers," Jarvis stated.
Castlelake acknowledged the constructive engagement with the EasyJet board and management but confirmed its decision not to proceed with an offer. EasyJet shares saw an increase of over 30 percent since Castlelake's initial bid and a further 3 percent rise following the announcement of Apollo's agreement.
The bidding process intensified after Castlelake's initial £5.5 billion offer in early July, which the EasyJet board had been inclined to recommend after rejecting prior 'highly opportunistic' bids. Apollo's £5.7 billion bid was later deemed a 'superior outcome' for shareholders.
Sir Stelios Haji-Ioannou, founder of EasyJet, welcomed Apollo's strategic intentions for growth. "The fact that Apollo, as one of the most well-resourced and experienced institutional investors in the world, has decided to back and grow EasyJet, the leading member of the easy family of brands, is testament to the strength of the easy brand and the business model of easyGroup Ltd.," he said. He also indicated that his family intends to remain as major shareholders.
The takeover pursuit occurs as EasyJet's share price has recently declined, making it a target for acquisitions. The airline reported a 70 percent profit drop to £85 million in the three months leading up to June, attributed to increased fuel prices and a decrease in customer demand.
Apollo's successful bid may face regulatory scrutiny, particularly concerning European Union ownership rules that aim to prevent foreign investors from gaining control of airlines. EasyJet established an Austrian subsidiary to maintain flight operations within the EU post-Brexit, a structure that could be subject to these regulations. This acquisition would follow a trend of British companies being taken over by foreign entities in recent months.