The £5.7 billion takeover bid from Apollo has secured the backing of easyJet's board, marking a significant shift in the airline's ownership prospects. This decision values easyJet at £7.15 per share, with the US private equity giant poised to recommend its all-cash offer to shareholders.
This development overturns an earlier agreement made just this week, where easyJet's board had agreed 'in principle' to accept a £5.5 billion offer from Castlelake, valuing shares at £6.90 each. However, market analysts had suggested that this bid undervalued the airline, setting the stage for a higher offer – which has now been met with Apollo's improved proposal.
In a statement on Friday, easyJet confirmed its change of direction. The company stated, "The easyJet board has carefully considered the proposed cash offer together with its financial advisers and has 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." This decision effectively withdraws the board's recommendation for the Castlelake proposal.
A notable aspect of Apollo's latest offer is the provision allowing existing easyJet shareholders to remain invested in the company, even if it were to be taken private and delisted. This contrasts with the Castlelake deal, which would have required shareholders to divest their holdings. Moreover, Apollo has expressed its commitment to supporting easyJet's current management and strategic direction, including fleet upgrades, enhancing ancillary and loyalty offerings, and expanding its holidays division – a departure from Castlelake's more aggressive approach.
Apollo has until 7 August to formalise its offer, with the company's stated intention to retain key staff and management suggesting a focus on continuity should the deal proceed. As the situation unfolds, it highlights the strong interest in easyJet's value and potential in the current market.