Apollo has agreed to buy budget airline Easyjet for £5.7bn in a shock deal that usurps an earlier bid from alternative asset manager Castlelake.
Easyjet said on Friday that it was poised to accept an all-cash offer from the US investment behemoth valuing the airline at 714p a share, trumping the 690p a share bid it received from Castelake just days earlier.
The offer represents an 80 per cent premium on the airline’s closing share price before Castlelake’s interest in Easyjet first emerged last month. The carrier said Apollo’s bid “delivers a superior outcome for Easyjet shareholders”, setting up a potential bidding war between the two American investors.
The offer from Apollo – one of the world’s largest asset managers – represents “an attractive combination of value, strategic alignment and long-term stewardship of the business”, the carrier said in a statement.
“Accordingly the Easyjet board is no longer minded to recommend the Castlelake proposal,” it added.
Easyjet shares rose more than 14 per cent in early trading.
Easyjet to quit London Stock Exchange
Any deal will see the orange-liveried carrier depart from the London Stock Exchange, making it one of several major FTSE 100 to leave the bourse this year.
City darlings Schroders and Beazely have both accepted offers from foreign competitors, while Swedish buyout giant EQT has successfully bid for London-listed Intertek in a deal valuing the testing giant at £11bn.
News of Castlelake’s interest in Easyjet first emerged last month. The American alternatives firm with roughly $38bn (£28.3bn) under management unveiled a surprise bid for the carrier that initially valued it at £4.7bn.
The offer was rejected out of hand by the airline’s board, which branded the buyout firm’s first attempt “opportunistic”. But Castlelake then made a flurry of sweeter deals, before shareholders pushed the aviation juggernaut to accept a £5.2bn offer last week.
Should Apollo’s counter-offer be successful, Easyjet would form part of the investment giant’s growing aviation stable. The group already part-owns Atlas Air and Modern Aviation, and last year its private credit arm lent $745m to Virgin Atlantic.
Before the flurry of private equity interest emerged, Easyjet had seen is valuation crater as a result of the Iran war. The cost of jet fuel more than doubled in the immediate aftermath of the first wave of strikes, prompting the carrier’s shares to fall by more than a third before Castlelake’s interest first emerged.
