EasyJet Rejects Apollo Bid, Extends Deadline for Castlelake

EasyJet has extended the deadline for private equity firm Castlelake to submit a formal takeover bid for the airline, giving the suitor until Friday to potentially match or surpass a rival offer from Apollo.

The airline's board has reiterated its recommendation for shareholders to accept Apollo's £5.7 billion offer, which values EasyJet at £7.15 per share. Castlelake now has until Friday to present an improved bid, a deadline that was extended from Monday.

Last month, EasyJet had agreed to a £5.5 billion takeover by Castlelake, after rejecting four previous bids as "highly opportunistic" bids from the firm. However, Apollo's subsequent offer trumped Castlelake's initial proposal.

EasyJet's third-quarter profits saw a 70 percent plunge, attributed to a surge in fuel prices driven by geopolitical events in the Middle East and a decline in customer demand. Investment director at stockbroker AJ Bell, Russ Mould, noted that the outcome on Friday might also reflect the impact of recent Middle East events on appetite for EasyJet.

Questions surrounding ownership structures and potential regulatory hurdles remain. The European Union is reportedly considering new ownership rules to restrict foreign investors from gaining control, a regulation that could still affect EasyJet due to its Austrian subsidiary established to maintain EU flight operations post-Brexit.

Any successful takeover bid would likely require the backing of the airline's founder, Sir Stelios Haji-Ioannou, and his family, who collectively own a 15.3 percent stake. Mould commented that while a deal might offer shareholders a takeout price above recent years, it would still be below immediate post-COVID highs and less than half of the levels seen in the mid-to-late 2010s.

The potential acquisition of EasyJet is part of a broader trend of foreign buyers targeting UK companies. Other firms that have faced takeover interest include Tate & Lyle, Beazley, Schroders, and the owner of William Hill.