Apollo snaps up Easyjet after Castlelake walks away
Easyjet has agreed a £5.7bn takeover deal with Apollo after rival bidder Castlelake pulled out of the bidding process.
In a joint announcement with the low-cost airline on Thursday, the American private markets juggernaut said it had “reached an agreement on the terms and conditions of a recommended cash acquisition”.
The offer has the backing of Easyjet founder Stelios Haji-Ioannou, who said he was “pleased with Apollo’s strategic intentions” for the business he founded in 1994.
“The fact that Apollo, as one of the most well-resourced and experienced institutional investors in the world, has decided to back and grow Easyjet, the leading member of the Easy family of brands, is testament to the strength of the easy brand and the business model of Easygroup,” he said in his first remarks since interest in the airline first emerged.
He added that he and his family planned to remain long-term major shareholders under its new ownership.
News of Apollo’s offer followed an earlier announcement from Castlelake withdrawing from the process, bringing an end to a months-long takeover tussle between the two investors.
Castlelake withdrawal ends Easyjet bidding war
Castlelake said it was “very appreciative of the constructive engagement with the Easyjet board and management team”, but would not make a firm bid for the orange-liveried carrier.
The $38bn alternative investor, headquartered in Minneapolis, had made a string of unsolicited offers for Easyjet between May and July, which were largely rebuffed by the airline’s board. Eventually it had a preliminary £5.5bn offer accepted, paving the way for the FTSE 250 group’s departure from the London stock market.
But the bid was trumped just days later by private markets juggernaut Apollo, which tabled its own £5.7bn offer. The board withdrew its support of Castlelake, backing Apollo’s more lucrative indicative proposal which it said provided “an attractive combination of value, strategic alignment and long-term stewardship”.
Apollo’s offer represents an 81 per cent premium to the airline’s closing price before either party’s interest emerged, and a 22 per cent premium to Easyjet shares’ four-year average.
The two investment firms had been given until Friday to table firm offers by the Takeover Panel.
As part of its formal offer, New York-headquartered Apollo set out how it plans to adhere to the strict European Union laws on airline ownership, which dictate that aviation groups must be majority owned and controlled by EU citizens.
Apollo said on Thursday that Haji-Ioannou’s commitment to roll his family’s cent stake into the new parent company, alongside a parallel decision to place a five per cent stake into an EU trust, would satisfy the trading bloc’s strict ownership rules. Under the arrangement, Apollo would own 49.9 per cent of the airline.
By accepting the offer, Easyjet will become the first large European carrier to be held in private markets. Most of the continent’s major flags are either part of large quoted groups, like British Airways owner IAG, or like Ryanair and Jet2 listed on the stock market.
Apollo has previously held stakes in low-cost carrier Aeromexico and Sun Country Airlines, which it listed on Nasdaq in 2021. Its private credit arm also has a large footprint in the aviation industry.
PJT Partners, Barclays and Citigroup advised Apollo on the deal.