Apollo Nears EasyJet Takeover as Rival Withdraws Bid
Private equity firm Apollo is poised to acquire the budget airline after competitor Castlelake decided not to make a rival offer.
Private equity firm Apollo is nearing a takeover of the budget airline EasyJet after its main rival, Castlelake, withdrew from the bidding war. Castlelake announced Friday that it would not make a formal offer that could surpass Apollo’s £5.7 billion proposal.
Castlelake had been given until 5 p.m. Friday to submit a bid that would challenge Apollo's offer. In a statement, Castlelake expressed appreciation for the constructive engagement with the EasyJet board and management but ultimately decided against proceeding. EasyJet shares saw a roughly 30 percent increase since Castlelake's initial offer, but dropped 5.86 percent following the announcement before recovering to trade up 0.27 percent.
The bidding process intensified in early July when Castlelake made a £5.5 billion takeover offer, which the EasyJet board indicated it was "minded to recommend" after previously rejecting four earlier offers as "highly opportunistic." However, Apollo subsequently submitted a £5.7 billion bid, which the EasyJet board accepted as a "superior outcome" for shareholders.
The competition for EasyJet comes after a challenging year for the airline, which saw its share price slump. Profits fell 70 percent to £85 million in the three months leading up to June, attributed to a surge in fuel prices fueled by the Iran war and a decline in customer demand. This financial performance made the airline a target for potential acquisitions.
Despite Apollo's expected victory in the bidding, the firm faces potential regulatory hurdles. Reports indicate that the European Union is preparing to review ownership rules to prevent foreign investors from gaining control of airlines operating within the bloc. EasyJet maintains its ability to operate within the EU through a subsidiary established in Austria following Brexit.
Apollo may also require the support of EasyJet's founder, Stelios Haji-Ioannou, and his family, who hold the largest shareholder stake at 15.3 percent. If the acquisition proceeds, EasyJet would join a growing list of British companies that have recently been acquired by foreign entities.