Apollo takes EasyJet after Castlelake walks away – Daily Business

EasyJet will be acquired by the American private equity firm Apollo in a £5.7 billion deal after rival suitor Castlelake withdrew its interest.

The investment fund had offered £5.5bn for the budget airline but this was gatecrashed by Apollo last month, leading the EasyJet board to switch its recommendation.

Castlelake confirmed it was walking away ahead of tomorrow’s extended deadline.

Apollo said it had secured irrevocable undertakings that Sir Stelios Haji-Ioannou’s family, the largest shareholder which accounts for 15.3% of voting shares, would support the bid.

Mr Haji-Ioannou, 59, and his family will switch their stake into a private vehicle that will own the airline after its listing is cancelled.

This is achieved through Apollo’s terms which enable investors to either accept the full cash offer, or swap their stock for so-called “rollover shares”.

Mr Haji-Ioannou said: “I am pleased with Apollo’s strategic intentions for the easyJet business, which aim to create more growth.

“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…is testament to the strength of the easy brand and the business model of easyGroup.

“My family and I intend to remain invested as long-term major shareholders of easyJet for the next chapter in the company’s journey.”

AJ Bell head of financial analysis Danni Hewson, said: “Having fewer bums on more expensive seats has created the kind of turbulence that private equity is always sensitive to, and as EasyJet’s share price dropped the European airline began to look like an increasingly tasty morsel.

“Cue not one, but two suitors entering the ring, with Castlelake unsuccessful after seemingly being gazumped following months of negotiations which almost got across the line.

“In the end it was Appollo that came up with the magic number of £7.15 per share. That’s a significant premium to where EasyJet’s shares were trading before the Iran war, but it’s a figure that’s still woefully short of the company’s pre-pandemic highs.

“Although there are no guarantees those halcyon days will return, with so many pressures on the airline. EasyJet is still recovering from those months when planes were grounded, despite the robust recovery as people rediscovered their love of travel and placed holidays firmly in the ‘required spending’ bracket.

“Whilst there are still significant hurdles for this deal to clear, not least European regulators with strict requirements for ownership of airlines, the potential loss of another well-known name from London markets will be seen as a blow.

“Air travel might not be as sexy as space travel, but retail investors understand it and names like EasyJet can’t easily be replaced.”