EasyJet backs Apollo’s $7.7B bid, dropping Castlelake

EasyJet said on Friday it had agreed in principle to a £5.7 billion ($7.7 billion) takeover by Apollo Global Management ↘ 0.61%, after the US private equity giant gatecrashed a rival bid from Castlelake with a higher offer of £7.15 per share in cash.bbc+2

The deal marks a dramatic turn in a month-long battle for the British budget carrier. EasyJet's board withdrew its support for Castlelake's £6.90-per-share proposal — agreed just five days earlier on July 5 — in favour of Apollo's bid, which represents a 3.6% premium over the Castlelake offer and an 81% premium to easyJet's closing share price on May 28, before takeover interest became public.reuters+2

A Bidding War Unfolds

Castlelake first disclosed its interest to UK regulators in late May and submitted multiple proposals that were rejected before the easyJet board agreed in principle to its fifth bid of £6.90 per share on July 5. Under UK Takeover Panel rules, Castlelake has until August 3 to either announce a firm offer or walk away.ig+2

Apollo's intervention upends that timeline. EasyJet said the Apollo proposal "delivers a superior outcome for easyJet shareholders". Shares in the airline surged on the news in London trading on Friday.tradingkey+2

Shareholder Revolt Brewing

Despite the board's endorsement, not all investors are satisfied. Jim Flavin, founder of Irish energy distributor DCC and a major easyJet shareholder, blasted the board's "very poor judgement" in recommending the deal, calling the offer cheap. According to the Financial Times, Flavin said he wanted to "stop this bid if I can," joining other major shareholders in rejecting the private equity offer for the FTSE 100 company.businesspost+2

The opposition could complicate matters for Apollo, which would need shareholder approval to complete the acquisition and take easyJet private, delisting it from the London Stock Exchange.ig

Regulatory Hurdles Ahead

Any deal faces additional scrutiny over airline ownership rules. Under Castlelake's earlier proposal, 51 percent of the carrier would have been owned by European Union nationals to comply with EU aviation regulations. Apollo will need to satisfy similar requirements to preserve easyJet's flying rights across Europe.finance.yahoo

The agreement remains non-binding, and there is no certainty a firm offer will materialise. EasyJet's board has advised shareholders to take no action while negotiations continue.easyjet