US firm Apollo snaps up EasyJet after rival Castlelake walks away
New York-based private equity giant Apollo Global Management has agreed a £5.7 billion takeover of the European low-cost carrier, trumping a bid from Minneapolis-based Castlelake.
Apollo has agreed a £5.7bn takeover deal with EasyJet after rival bidder Castlelake pulled out of the bidding process.
In a joint announcement with the low-cost airline on Thursday, the American private markets juggernaut said it had "reached an agreement on the terms and conditions of a recommended cash acquisition". The offer has the backing of EasyJet founder Stelios Haji-Ioannou, who said he was "pleased with Apollo's strategic intentions" for the business he founded in 1994.
Apollo is headquartered in New York and already holds stakes in Aeromexico and Sun Country Airlines, which it listed on Nasdaq in 2021. Its private credit arm also has a large footprint in the aviation industry across North America.
"The fact that Apollo, as one of the most well-resourced and experienced institutional investors in the world, has decided to back and grow EasyJet, the leading member of the Easy family of brands, is testament to the strength of the easy brand and the business model of Easygroup," he said in his first remarks since interest in the airline first emerged.
He added that he and his family planned to remain long-term major shareholders under its new ownership.
News of Apollo's offer followed an earlier announcement from Castlelake withdrawing from the process, bringing an end to a months-long takeover tussle between the two investors. Castlelake, a $38bn alternative investor headquartered in Minneapolis, had made a string of unsolicited offers for EasyJet between May and July, which were largely rebuffed by the airline's board. Eventually it had a preliminary £5.5bn offer accepted, paving the way for the FTSE 250 group's departure from the London stock market.
But the bid was trumped just days later by private markets juggernaut Apollo, which tabled its own £5.7bn offer. The board withdrew its support of Castlelake, backing Apollo's more lucrative indicative proposal which it said provided "an attractive combination of value, strategic alignment and long-term stewardship".
Apollo's offer represents an 81 per cent premium to the airline's closing price before either party's interest emerged, and a 22 per cent premium to EasyJet shares' four-year average.
As part of its formal offer, New York-headquartered Apollo set out how it plans to adhere to the strict European Union laws on airline ownership, which dictate that aviation groups must be majority owned and controlled by EU citizens.
Apollo said on Thursday that Haji-Ioannou's commitment to roll his family's stake into the new parent company, alongside a parallel decision to place a five per cent stake into an EU trust, would satisfy the trading bloc's strict ownership rules. Under the arrangement, Apollo would own 49.9 per cent of the airline.
By accepting the offer, EasyJet will become the first large European carrier to be held in private markets. Most of the continent's major flags are either part of large quoted groups, like British Airways owner IAG, or like Ryanair and Jet2 listed on the stock market.
PJT Partners, Barclays and Citigroup advised Apollo on the deal.