EasyJet has agreed a £5.7 billion cash takeover by private equity firm Apollo which has gatecrashed an earlier agreed deal with US investment fund Castlelake.
The EasyJet board said it had reached an agreement in principle on the key financial terms of a possible cash offer at 715p per share.
Apollo has confirmed that it would agree to satisfy any conditions relating to merger control and EU Foreign Subsidies Regulation clearances relating to the proposed transaction which has been seen as a sticking point to an airline acqusition.
The proposed offer made on 8 July represents a premium of 81% to the closing price of 394p at the close of business on 28 May, the last day prior to the offer from Castlelake of 690p per share, submitted on 4 July.
Apollo will finance the deal from Apollo funds. Barclays has provided a letter to Apollo indicating that it is “highly confident” of being able to arrange the required debt financing for the offer.
Apollo said it has followed EasyJet for many years and sees it as “a highly differentiated franchise with significant long-term growth potential.”
It said it backs EasyJet’s existing strategy of evolving and strengthening the low-cost carrier model, most notably through upgauging the fleet, enhancing the ancillary and loyalty offering, and scaling holidays into a structurally differentiated earnings stream.
“Apollo further believes that easyJet management’s operational and commercial ambitions can be substantially accelerated via the access to incremental capital and longer-term business and strategic planning that a private company setting affords.”
The EasyJet board said the proposed transaction “offers an attractive combination of value, strategic alignment and long-term stewardship of the business. Accordingly, the easyJet Board is no longer minded to recommend the Castlelake proposal.”
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