EasyJet Suitors Face Friday Deadline for Competing Takeover Bid

EasyJet has granted its suitor Castlelake until Friday to submit a revised takeover bid, extending the deadline to match a rival offer from Apollo. The airline's board reiterated its recommendation for shareholders to accept Apollo's deal, which values the company at £7.15 per share. Castlelake's revised offer must be submitted by Friday, after the initial "put up or shut up" deadline was moved from Monday.

Last month, EasyJet had agreed to a £5.5 billion takeover by Castlelake, describing its previous four bids as "highly opportunistic." However, Apollo subsequently submitted a £5.7 billion offer, which the EasyJet board accepted.

"Friday's outcome will reveal if appetite for EasyJet has been affected by the latest events in the Middle East," said Russ Mould, investment director at stockbroker AJ Bell. The airline's profits fell by 70% in the third quarter, a period marked by a surge in fuel prices attributed to the conflict in Iran and a decrease in customer demand.

Potential Hurdles

Even if a takeover agreement is reached, EasyJet could face regulatory challenges. Reports suggest the European Union is preparing to review ownership rules to prevent foreign investors from gaining control. These rules remain relevant for EasyJet, which established an Austrian subsidiary to continue operating flights within the bloc post-Brexit.

The backing of founder Sir Stelios Haji-Ioannou and his family, who collectively hold a 15.3% stake, is also likely to be crucial for any bid to succeed. Mould commented that shareholders might have mixed feelings about a deal, as the potential takeover price is above recent levels but below post-COVID highs and less than half of what was achieved in the mid-to-late 2010s.

EasyJet is one of several companies on the London stock market that have recently been targeted by foreign buyers. Other companies include Tate & Lyle, Beazley, Schroders, and the owner of William Hill.