TLDR
- Apollo Global Management has submitted a £5.7 billion ($7.7 billion) acquisition proposal for EasyJet, pricing shares at 715p each
- The proposal surpasses Castlelake’s competing 690p-per-share offer, setting up a competitive bidding scenario for the UK low-cost carrier
- EasyJet shares climbed 14.75% during London market hours, reaching 674.98p — the strongest level witnessed since February 2022
- Apollo faces an August 7 deadline to formalize its proposal under UK regulatory requirements; Castlelake must decide by August 3
- Both potential acquirers face limitations on complete ownership due to European Union regulations mandating majority European national ownership
EasyJet experienced a substantial stock rally on Friday following Apollo Global Management’s unexpected 715p-per-share acquisition proposal for the British low-cost airline, surpassing a competing proposition from Castlelake and initiating what market observers describe as an aggressive bidding contest.
The all-cash 715p proposition places EasyJet’s valuation at £5.7 billion ($7.7 billion) and delivers a 21.6% premium relative to EasyJet’s prior closing position of 588.20p. Stock performance reached 674.98p during London exchange activity — marking the highest point since late February 2022 — though still below both competing valuations.
Apollo’s proposition emerged mere days following EasyJet’s preliminary acceptance of Castlelake’s fifth and ultimate bid of 690p per share. EasyJet’s directors indicated they are “no longer minded” to endorse the Castlelake arrangement.
“A bidding war is on,” said Neil Wilson, investor strategist at Saxo UK.
EasyJet announced its board now stands ready to endorse Apollo’s proposition to shareholders, subject to finalizing outstanding transaction terms.
What’s Attracting Buyers
Airport landing rights, a contemporary Airbus fleet portfolio, and a rapidly expanding vacation packages division are regarded as primary attractions for both prospective buyers.
Susannah Streeter, chief investment strategist at Wealth Club, indicated the vacation business was probably a significant draw. Package vacation offerings deliver superior margins and more stable revenue streams compared to airline ticketing, she explained.
Morgan Stanley reported that Apollo intends to support EasyJet’s current strategic direction — expanding its aircraft fleet, increasing ancillary income streams, and developing the vacation packages unit. The financial institution contended EasyJet possesses stronger long-range expansion prospects under private control.
Apollo oversees assets exceeding $1 trillion and brings considerable aviation sector experience, having previously placed capital in Aeromexico, Sun Country Airlines and Atlas Air, while extending financing to Air France-KLM and Virgin Atlantic.
The Ownership Hurdle
A significant complexity confronting both prospective acquirers: European Union and UK regulations mandate that airlines conducting operations within the bloc maintain majority ownership and governance by European nationals.
Castlelake’s framework addressed this requirement by allocating 51% ownership to EU nationals, encompassing aviation industry veterans Peter Bellew and Mark Breen.
Apollo acknowledged it would undertake the required measures to secure a European partnership but has yet to disclose additional specifics.
According to UK takeover regulations, Apollo must present a definitive proposal or withdraw by August 7. Castlelake faces an earlier deadline of August 3.
Apollo shares declined 1.1% during U.S. premarket trading following the disclosure.
In May, EasyJet disclosed that first-half losses expanded 27% to £377 million, with escalating fuel expenditures linked to the US-Iran conflict identified as a primary contributor. The carrier warned that the second half would likewise experience impacts.
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