Apollo Outbids Castlelake for easyJet at £7.15 Per Share, July 11

Apollo Global Management launched a £5.7 billion takeover bid for easyJet on July 10, offering £7.15 per share and triggering a bidding war. The offer beats Castlelake’s £6.90-per-share proposal, which easyJet had accepted just days earlier. EasyJet shares surged 16% to £6.80, though still below Apollo’s offer price. The bid represents an 81% premium to the £3.94 close on May 28, before takeover interest emerged.

Why Apollo’s offer beats Castlelake’s

Apollo’s £7.15-per-share bid values easyJet at £5.7 billion, compared to Castlelake’s £6.90 proposal worth £5.5 billion. That is a 3.6% premium. EasyJet’s board said Apollo’s offer delivered a “superior outcome” for shareholders and dropped support for Castlelake, which it had agreed in principle to accept on July 6.

Castlelake said it was “considering its options” regarding a possible higher offer. Apollo must firm up its bid by early August.

What makes easyJet attractive to bidders

EasyJet is profitable and operates 1,200 routes across 35 European countries with over 19,000 employees. The airline owns valuable take-off and landing slots at major airports including Gatwick and Paris Charles de Gaulle, which can be worth tens of millions of pounds when traded. The carrier also runs a fast-growing holidays business that generates higher margins than airline operations alone.

Recent losses from soaring jet fuel costs and Iran-related geopolitical turmoil have beaten down the stock, creating a buying opportunity. Revenue grew 12% to £3.95 billion in the six months to March, but the airline reported a headline loss of £377 million, 27% deeper than a year earlier.

The EU ownership hurdle both bidders face

EU law requires airlines flying in the bloc to be majority-owned and effectively controlled by EU member states or qualifying European nationals. Both Apollo and Castlelake must satisfy this rule to complete their deals. Castlelake proposed partnering with two Irish aviation executives to hold a controlling stake through a European entity.

Apollo has signalled it will continue the brand licence agreement with founder Sir Stelios Haji-Ioannou, whose family owns 15% of easyJet. Both bidders’ lawyers believe the EU ownership structure can be arranged, boosting investor confidence a deal will close.

Market reaction and investor sentiment

EasyJet shares climbed 16% to £6.80 on July 10, their highest level since February 2022, though they remain below Apollo’s £7.15 offer price. Some investors worry regulatory hurdles could delay or block the deal. One anonymous easyJet investor told Reuters it was “reassuring that multiple private investors can see the undervaluation in the shares that public investors have seen for some time.”

The bidding war reflects confidence in easyJet’s long-term value despite current headwinds from fuel costs and geopolitical instability.

Final Thoughts

Apollo’s higher bid has triggered a competitive auction for easyJet, signalling strong private equity appetite for the airline’s network and slots despite recent losses. Investors now await Castlelake’s response and EU regulatory approval, both critical to deal completion.

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The content shared by Meyka AI PTY LTD is solely for research and informational purposes.  Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.