**US Private Equity Firm Launches £5.7bn Takeover Bid for easyJet**
In a significant development in the aviation industry, British low-cost airline easyJet has accepted a revised takeover proposal from US private equity firm Apollo Global Management, valued at £5.7 billion (approximately $7.7 billion). This move has initiated a bidding war for the airline, as Apollo's offer surpasses a competing bid from Castlelake, another US investment firm.
On Friday, easyJet announced that it had reached an agreement in principle with Apollo following an unsolicited offer of £7.15 per share. This bid outstripped Castlelake's proposal of £6.90 per share, prompting easyJet's board to declare that it would no longer recommend Castlelake's offer to shareholders. The airline stated that Apollo's proposal represents "a superior outcome" for its investors.
Prior to Apollo's entry into the bidding process, easyJet had been poised to finalize a deal with Castlelake, which had submitted its fifth and improved offer just days earlier. Castlelake, which manages approximately $38 billion in assets, had been seen as the frontrunner in the acquisition race until Apollo's latest bid shifted the dynamics.
Analysts are now predicting an intense bidding war for easyJet, with Neil Wilson, an investment strategist at Saxo UK, commenting on the airline's attractive position. He noted that easyJet's prime take-off and landing slots, growth in its higher-margin holidays business, and a substantial order book for new Airbus aircraft make it a highly desirable target for investors. Wilson suggested that easyJet may be worth more than both current offers, indicating that further bids could be forthcoming.
The growing importance of easyJet's holidays division, which generates higher margins and more predictable revenues compared to traditional airline ticket sales, is likely a significant factor in Apollo's interest. Susannah Streeter, head of money and markets at Wealth Club, emphasized that the potential for expanding this segment of easyJet's business could unlock considerable value, making the airline an appealing investment opportunity for Apollo.
Following the announcement of Apollo's bid, shares in easyJet experienced a notable increase, rising by 14.5% to £6.73 during morning trading on the London Stock Exchange. However, despite this surge, the share price remains below the per-share values of both takeover offers, suggesting that investors may be anticipating additional bids in the near future.
Apollo Global Management, which oversees more than $1 trillion in assets globally, has a history of investments in the aviation sector. The firm has previously acquired stakes in companies such as Aeromexico, Sun Country Airlines, and Atlas Air, and has provided financing to major airlines including Air France-KLM and Virgin Atlantic.
As the bidding war for easyJet unfolds, the outcome remains uncertain, but the heightened interest from major investment firms signals a robust appetite for growth in the airline industry, particularly in the wake of the pandemic's impact on travel and tourism. The situation continues to evolve, and stakeholders will be closely monitoring developments in the coming days.