EasyJet agrees $7.7 billion takeover by Apollo as Castlelake walks away

Apollo Global has agreed to buy easyJet in a deal that values the European budget airline at about £5.70 billion ($7.7 billion), the companies said on Thursday, as rival suitor Castlelake abandoned its pursuit. The deal ends months of uncertainty surrounding one of Europe’s biggest low-cost airlines as the industry grapples with rising costs from the Iran war. EasyJet’s board, advised by Evercore, unanimously recommended the cash offer, saying it considered the terms to be fair and reasonable. “While we remain confident in the strength of our business and the opportunities ahead, we believe this offer appropriately recognises the quality of the business we have built and delivers immediate, certain and attractive value for shareholders,” easyJet Non-Executive Chair Stephen Hester said in a statement. Apollo, which manages about $1.05 trillion in assets and has previously invested in Sun Country Airlines, Aeromexico and Atlas Air, said it plans to accelerate easyJet’s commercial ambitions — including expanding its fast-growing holidays business — under private ownership. Castlelake earlier on Thursday withdrew from the takeover race without giving a reason. It had tabled five bids for easyJet before Apollo entered the fray in July, topping Castlelake’s £5.5 billion proposal and securing the backing of the airline’s board. EU OWNERSHIP DILEMMA Investors and regulators have raised questions about how Apollo will comply with European Union airline ownership rules, given its bases across the bloc. EasyJet’s flying rights within the bloc depend on its EU-based airline remaining majority owned and controlled by EU interests. Following the deal, Apollo anticipates that the family of easyJet founder Stelios Haji-Ioannou and other shareholders remaining invested will hold between 45.1% and 49.9% of the ordinary capital of the purchasing vehicle. An EU management trust will hold up to 5%, Apollo’s funds will hold the rest, up to a maximum of 49.9%. “Having carefully reviewed the proposal by Apollo, my family members and I have decided to support the recommended acquisition announced by the easyJet board,” Haji-Ioannou said in a separate statement. EasyJet shares, which have rallied more than 65% since the initial takeover interest was disclosed, were up 3.6% at 675 pence by 1406 GMT. The £7.15 per share offer represents a premium of about 81% to easyJet’s closing price of £3.94 on May 28, the last trading day before Castlelake’s interest became public. Sir Stelios Haji-Ioannou said on Thursday that he and his family intend to remain shareholders in the private company that will emerge following easyJet’s delisting from the London Stock Exchange. In a written statement, Haji-Ioannou welcomed Apollo’s plans for the airline, saying they would create new opportunities for its future growth. “I welcome Apollo’s strategic intentions for easyJet, which aim to create new growth prospects for the company,” he said. He added that Apollo’s decision to invest in easyJet represented a strong endorsement of both the easy brand and the business model of easyGroup Ltd. “The fact that Apollo, one of the world’s strongest and most experienced institutional investors, has decided to support and invest in the growth of easyJet, the flagship member of the easy family of brands, is a strong validation of the value of the easy brand and the strength of easyGroup Ltd’s business model,” he said. Haji-Ioannou said he and his family intend to remain significant long-term shareholders in easyJet and support “the next chapter in the company’s journey”. He recalled that the easy family of brands began in 1994, when, at the age of 27, he founded easyJet as the first business under the easy brand. He noted that easyJet was listed on the London Stock Exchange in 2000 to raise funding for the expansion of its fleet, which has grown from 19 aircraft at the time to around 356 today. Haji-Ioannou added that he had made the strategic decision to retain ownership of the easyJet trademark through his private company, easyGroup Ltd. He said ownership of the easy family of brands has generated a steady stream of income over the past 26 years, enabling him to fund the charitable work of the Stelios Philanthropic Foundation.