EasyJet board accepts US investment fund Apollo’s takeover bid

The easyJet board has confirmed agreement on the terms of a takeover by US investment fund Apollo involving a cash offer valuing the airline at £5.7 billion.

 

Announcement of the deal ahead of the August 7 deadline for a firm offer by Apollo precludes a rival bid from competing US investment fund Castlelake which made a series of increasing takeover offers for the airline before Apollo stepped in last month.

 

The offer has been formally agreed with a takeover vehicle, Eagle Bidco, indirectly owned by Apollo Funds managed by Apollo Capital Management.

 

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UK and EU shareholders in easyJet may sell their shares or elect to retain ‘rollover’ shares in the new parent company in lieu the cash offer.

 

The transaction is currently expected to complete by the end of the first quarter of 2027, subject to a vote by shareholders and to regulatory approvals in the UK and EU.

 

In statement, the easyJet board noted Bidco “has received irrevocable undertakings” from easyJet founder Stelios Haji-Ioannou and his family and their respective holding vehicles to vote in favour of the offer “in respect of shares representing 15.31%” of the existing share capital of easyJet. 

 

These undertakings “remain binding in the event that a higher competing offer for easyJet is made”.

 

The board also noted that following the acquisition, the share capital of the new easyJet holding company Topco “will be held by three shareholder groups: the ‘rollover shareholders’, including the Haji-Ioannou family, holding between 45.1% and 49.9%; an EU Trust holding up to 5% on behalf of employees; and Apollo Funds, holding the balance up to a maximum of 49.9%.

 

The precise proportions remain “subject to adjustment . . . but in any event will be in accordance with applicable airline ownership and control requirements”. 

 

The statement said Bidco has “committed to take all necessary steps to satisfy the [EU] Merger Control Conditions and use its best endeavours . . . to satisfy any other regulatory conditions”.

 

It added: “Apollo has followed easyJet for many years and believes the easyJet Group is one of the most attractive businesses in the global aviation sector. 

 

“Apollo and Bidco regard the easyJet Group as having . . .  a leading brand, compelling customer proposition, expansive network, strong positions in attractive markets, and a disciplined operating model, resulting in significant long-term growth potential. 

 

“Apollo and Bidco have also been impressed by the progress delivered by easyJet’s management team . . . including in diversifying the easyJet Group’s business model, the continued growth of the easyJet Group’s Holidays business, the evolution of its ancillary and loyalty offering and the ongoing upgauging of its fleet.

 

“Apollo and Bidco are highly supportive of the easyJet management team’s existing strategy for the easyJet Group and believe there is a significant opportunity to accelerate the operational and commercial ambitions for the easyJet Group. 

 

“In particular, Apollo and Bidco believe that additional investment and focus can support further growth across revenue management, ancillary revenues, loyalty and network optimisation, as well as the pursuit of new partnership and distribution opportunities, while continuing to scale the easyJet Group’s Holidays business.”

 

Sir Stephen Hester, chair of easyJet, said: “The easyJet board has carefully evaluated the proposal from Apollo alongside easyJet’s standalone prospects. 

 

“While we remain confident in the strength of our business and the opportunities ahead, we believe this offer appropriately recognises the quality of the business we have built and delivers immediate, certain and attractive value for shareholders.”

 

EasyJet chief executive Kenton Jarvis added: “We welcome Apollo’s commitment to our business and our people, and believe its experience in the aviation sector makes it a strong partner for easyJet as we accelerate our growth plans.”

 

Haji-Ioannou said: “I am pleased with Apollo’s strategic intentions for the easyJet business, which aim to create more 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...is testament to the strength of the easy brand and the business model of easyGroup.

 

“My family and I intend to remain invested as long-term major shareholders of easyJet for the next chapter in the company’s journey.”

 

Apollo partner and European private equity lead Alex van Hoek said: “EasyJet is a leader in European aviation, having built a differentiated market position through its compelling customer proposition, expansive network and strong brand. 

 

“Apollo strongly supports easyJet’s commitment to enhancing the connectivity of travellers throughout Europe and the UK and the important role its employees play in serving customers. 

 

“We’re proud to be trusted to play a lead role supporting the easyJet Group in this next phase of its growth.”

 

Antoine Munfakh, Apollo partner and deputy global head of private equity, added: “Our partnership with easyJet will draw upon Apollo’s extensive experience investing in and growing businesses in the airline sector.”

 

The statement confirming acceptance of the takeover described the US investment fund’s objective as “to leverage Apollo’s sector expertise, global network, operational experience and access to capital as well as the expertise of easyJet’s management team and employees to help the easyJet Group realise its full potential as an industry leader.”

 

It noted: “In the context of continued market and macro uncertainty, Apollo and Bidco believe easyJet’s next phase of growth and development will be best served as a private company. 

 

“Private ownership would provide access to incremental capital and enable longer-term business and strategic planning, allowing management to invest with greater flexibility and pursue opportunities that may take longer to realise than is typically possible in the public markets.” 

 

It stated: “The easyJet directors are highly confident in easyJet’s strategy and its ability to deliver attractive long-term value for easyJet shareholders. 

 

“However, the directors are also mindful of the current external market conditions in the aviation sector, including geopolitical uncertainties and broader macroeconomic conditions. 

 

“The current situation in the Middle East, and its impact on customer confidence and jet fuel prices, demonstrate the types, and extent, of risks that easyJet faces in delivering its standalone strategy.”

 

It added: “The easyJet directors have considered the deliverability of the acquisition [and] given due consideration to Apollo and Bidco’s intentions for the easyJet Group’s business, management and employees.”

 

A senior figure at the British Airline Pilots’ Association (Balpa) said of the takeover: “Balpa will ensure our members’ priorities and concerns are heard during the takeover process and beyond."

 

Chris Jones, Balpa director for industrial relations and employment policy, said: “Regardless of who owns the company, our priority will be to defend and advance our members’ terms and conditions as part of the continued safe and professional operation of the airline.

 

"We will advocate for the issues that matter to our members, the security of their employment and pensions, fatigue and meaningful engagement.
 
“Our members are integral to easyJet’s success. 
 
“Balpa will engage constructively with Apollo and easyJet throughout the process to ensure pilots’ interests are understood and represented.”