EasyJet Agrees £5.7bn Takeover by US Private Equity Giant Apollo

Shareholders are offered 715p per share as Apollo wins the battle to buy one of Europe’s largest low-cost airlines

easyJet has agreed to be taken over by US private equity firm Apollo in a deal worth around £5.7 billion, potentially bringing an end to the airline’s time on the London stock market.

Apollo defeated rival bidder Castlelake, which withdrew from the takeover battle after previously offering around £5.5 billion. This allowed Apollo to move forward with its higher offer.

Under the proposed deal, easyJet shareholders will receive 715p per share.

The takeover still needs to be approved by shareholders. If successful, it is expected to complete during the first quarter of next year, after which easyJet is expected to be delisted from the stock market.

Why Apollo Wants to Buy easyJet

easyJet was founded by Sir Stelios Haji-Ioannou in 1995 as a low-cost alternative to traditional airlines such as British Airways.

The company has since developed one of Europe’s largest airline networks and employs more than 19,000 people.

Apollo believes easyJet remains one of the most attractive businesses in global aviation and sees opportunities for further growth.

Sir Stelios and his family, who own around 15% of easyJet, have also supported the takeover and intend to remain major long-term shareholders.

Apollo has promised not to cut jobs for at least one year following the acquisition.

Iran War Creates New Pressure for Airlines

The takeover comes during another difficult period for the aviation industry.

The war involving Iran and disruption to the Strait of Hormuz have pushed fuel prices higher. Aviation fuel is one of the largest costs facing airlines, meaning prolonged increases in oil prices can put significant pressure on profit margins.

This may be particularly important for low-cost airlines such as easyJet, which rely heavily on controlling costs while keeping ticket prices competitive.

Despite these pressures, Apollo appears confident about easyJet’s longer-term value.

The 715p offer represents a significant premium compared with easyJet’s share price before the Iran war. However, it remains well below the levels the company’s shares reached before the Covid-19 pandemic.

What the easyJet Takeover Could Mean for Investors and Traders

The proposed acquisition could have several implications for markets:

• easyJet shares are likely to trade close to the 715p takeover price while investors assess the chances of the deal completing
• A successful takeover would see easyJet removed from the stock market, meaning existing shareholders would receive cash for their shares
• Any signs that the deal could fail may cause the share price to fall back towards levels seen before the takeover offer
• A rival bidder could potentially create further upside, although Castlelake has already withdrawn
• Higher oil prices remain a major risk for the wider airline industry
• Airlines such as British Airways owner IAG, Ryanair and Wizz Air could attract greater investor attention following the deal
• The acquisition may encourage speculation that other undervalued UK-listed companies could become takeover targets

For existing easyJet shareholders, the key issue is now whether the Apollo deal receives the necessary approval.

For the wider market, the takeover highlights how private equity investors may see value in UK-listed companies even when geopolitical uncertainty and higher energy costs are putting pressure on their share prices.

Sources: (MSN.com, Reuters.com)