A takeover battle for EasyJet has intensified after Apollo Global Management submitted a £5.7 billion ($7.7 billion) offer for the British low-cost carrier, prompting the airline's board to withdraw its backing for a rival proposal from Castlelake.
Apollo is offering £7.15 per share, exceeding Castlelake's latest £6.90-per-share proposal by about 3.6%. EasyJet said its board now considers Apollo's proposal to offer greater value for shareholders and has ended its support for the agreement reached in principle with Castlelake only days earlier.
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The new proposal gives Apollo until August 7 to submit a firm offer under UK takeover rules. Castlelake, which first disclosed its interest in the airline in May, has until August 3 to do the same.
The competing bids come after several years of weak stock market performance for easyJet. Although passenger demand has recovered since the pandemic, the airline's shares have remained well below pre-2020 levels, making the company a potential acquisition target for private equity investors.
Apollo said it intends to maintain easyJet's current business strategy, retain its management team and continue expanding the airline's holiday business. The investment firm also plans to preserve the easyJet brand through the existing licensing agreement with easyGroup, founded by Stelios Haji-Ioannou.
Castlelake has disclosed few details about its plans for the airline beyond supporting its ongoing fleet renewal program, which includes replacing older aircraft with newer Airbus models.
EasyJet operates more than 350 aircraft and is one of Europe's largest low-cost carriers, serving an extensive network across the continent. Its scale, established market position and orderbook of new Airbus aircraft have made the airline an attractive target despite recent pressure on profitability from higher operating costs and fuel prices.
Any acquisition by a non-European investor would face regulatory scrutiny because European Union rules require airlines operating within the bloc to remain majority owned and effectively controlled by EU interests. Both Apollo and Castlelake would need to address those ownership requirements before completing a transaction.
