EasyJet proposes accepting rival £5.7bn offer and rejects Castlelake bid

An unexpected improved rival offer for easyJet worth £5.7 billion emerged today to knock-out a takeover bid by investment firm Castlelake.

 

In an about-turn, the board of the budget airline recommended accepting a competing bid from US private equity company Apollo Management of £7.15 per share against Castlelake’s proposal valuing easyJet at £5.2 billion.

 

Apollo is described as a leading aviation investor with a longstanding track record of creating value across the airline industry.

 

The easyJet board “unanimously concluded that the financial terms of the proposed cash offer are at a level that it would be minded to recommend to easyJet shareholders”.

 

The offer “delivers a superior outcome for easyJet shareholders by providing a higher cash value than Castlelake’s latest proposal of £6.90 per easyJet share”.

 

EasyJet “further believes that the proposed transaction offers an attractive combination of value, strategic alignment and long-term stewardship of the business. Accordingly, the easyJet board is no longer minded to recommend the Castlelake proposal”.

 

Apollo has been set a deadline of 5pm on August 7 to either make a firm bid for easyJet or walk away. Castlelake’s deadline to make a firm offer is August 3.

 

A statement issued to the London Stock Exchange today (Friday) said: “Apollo believes that, through the proposed transaction, it is uniquely positioned to deliver the best stewardship of easyJet, supporting easyJet in furthering its business plan and the delivery of its long-term strategic objectives.”

 

Apollo has followed easyJet for many years “and continues to regard it as one of the most attractive businesses in the global aviation sector and a highly differentiated franchise with significant long-term growth potential”. 

 

The statement added: “Apollo believes in easyJet’s existing strategy of evolving and strengthening the low-cost carrier model, most notably through upgauging the fleet, enhancing the ancillary and loyalty offering, and scaling Holidays into a structurally differentiated earnings stream. 

 

“Apollo further believes that easyJet management’s operational and commercial ambitions can be substantially accelerated via the access to incremental capital and longer-term business and strategic planning that a private company setting affords.

 

“Apollo recognises the important contribution that easyJet’s management team, alongside easyJet’s employees, have made towards the company’s successes. Apollo places a high value on people and believes that identifying and retaining key staff within the easyJet Group will be of paramount importance. 

 

“As long-term oriented shareholders with a track record of airline value creation and growing the employee bases of prior airline investments, Apollo sees significant potential in easyJet’s growth path ahead, to the benefit of all stakeholders including employees. 

 

“To this end, Apollo looks forward to partnering with easyJet’s employees to accelerate and enhance easyJet’s continued success following completion of the proposed transaction. 

 

“In particular, the strong commitment of easyJet’s employees to its continued growth as part of the Apollo Funds’ broader portfolio will be critical, and Apollo believes that easyJet’s employees will benefit from greater opportunities as a result. 

 

“Apollo intends to combine its knowledge of the aviation industry with that of easyJet’s employees as a foundation for successful collaboration.

 

“Apollo also attaches great importance to the strength of the easyJet brand (which is the leading brand in the broad portfolio of the “easy” family of brands which is owned by easyGroup Ltd, the investment vehicle of easyJet founder Sir Stelios Haji-Ioannou) and intends that it will remain in use following completion of the proposed transaction.  

 

“Apollo intends to keep in place (and does not intend to make any changes to) the brand licence agreement between easyJet and easyGroup Ltd. 

 

“The expectation is that the brand value and associated royalties will increase as the aforementioned commercial and growth initiatives take hold.”

 

Apollo has widespread aviation interests including aircraft leasing company Perseus Aviation and provided Air France-KLM with €500 million financing in 2023 to support engineering and maintenance activities.

 

It became the largest shareholder in Aeromexico in 2022 after the airline emerged from bankruptcy protection and made a loan investment in SAS the following year.

 

Apollo also agreed in 2024 to acquire The Travel Corporation (TTC) which includes multiple brands such as Trafalgar, Uniworld, Contiki and Insight Vacations.