The board of easyJet has thrown its weight behind a £5.7bn takeover from US private equity giant Apollo Global Management, spurning a rival offer that had been accepted in principle just days earlier. The low-cost carrier said on Friday that it was “minded to recommend” Apollo’s all-cash offer of £7.15 per share to shareholders, describing it as “a superior outcome” to the £6.90 per share proposal from Castlelake, which the board is now “no longer minded” to accept.
The surprise move thrusts the Luton-based airline into a two-way bidding war. Castlelake, which had upped its offer five times before securing easyJet’s backing earlier this week, said it was “considering its options in respect of its possible offer”. Apollo has until 5pm on 7 August to make a firm bid or walk away; Castlelake’s deadline is 3 August.
“EasyJet board backs £5.7bn Apollo bid, abandoning Castlelake's lower offer.”
Apollo signalled it would back easyJet’s existing strategy, focusing on upgrading the fleet, enhancing ancillary revenues and scaling its holidays business — an area that analysts say generates higher margins and more predictable revenues than tickets alone. “Apollo believes in easyJet’s existing strategy of evolving and strengthening the low-cost carrier model,” the US firm said. It also intends to keep in place an existing brand licence agreement with founder Sir Stelios Haji-Ioannou, whose family still owns about 15% of the airline and would be in line for an £855m payday if they sold.
Founded by Sir Stelios in 1995, easyJet employs more than 19,000 people and flies 1,200 routes across 35 European countries. Its first flights took off from Luton to Glasgow and Edinburgh in November 1995. Under EU rules, European airlines must be majority-owned by investors within the region — a constraint Apollo’s bid would have to navigate.
Susannah Streeter, chief investment strategist at Wealth Club, said Apollo was focusing on easyJet’s potential. “While the carrier has been buffeted recently by higher fuel costs and geopolitical turbulence, it has built a resilient European network, a strong balance sheet and, crucially, a fast-growing holidays business,” she said. But Conroy Gaynor, senior consumer analyst at Bloomberg Intelligence, warned that “the need to improve the airline margin suggests any success in lowering costs won’t necessarily translate to lower fares”.
For now, passengers are unlikely to notice any change. “It’s very much business as usual for now, with flights, bookings and loyalty schemes unaffected while any deal works its way through the regulatory process,” Streeter added. The outcome of this bidding war will determine not only the ownership of one of Europe’s largest airlines but also the future of its low-cost model under private equity control.