Apollo agrees £5.7bn easyJet takeover deal as Castlelake walks away

Apollo Global has submitted a firm cash offer for easyJet, valuing the airline at approximately £5.7 billion. While the transaction is still to be approved by shareholders, it will not be contested by competing bidder Castlelake, which confirmed withdrawal from the bidding process.

Under the proposed transaction, easyJet shareholders would receive £7.15 in cash for each share they hold. The airline’s board has unanimously recommended the offer, which is some 80% higher than the value of easyJet’s shares before the takeover interest began.

The acquisition would be completed through Eagle Bidco, a company controlled by funds managed by Apollo. Eligible shareholders may also be able to exchange their holdings for unlisted shares in Apollo’s new parent company, although that alternative will be subject to eligibility rules and an overall cap.

Castlelake walks away from easyJet deal

Castlelake confirmed to ADS Advance today, 6 August, that it would not proceed to a firm offer for easyJet following several weeks of discussion with the airline’s board and management.

The withdrawal was made under Rule 2.8 of the City Code on Takeovers and Mergers, which normally prevents the company from returning with another proposal for six months.

However, Castlelake has specifically reserved the right to set aside these restrictions if another company makes a firm offer, such as Apollo. With Apollo’s offer now firmly on the table, Castlelake could enter a competing offer, although there is no indication that it plans to.

Castlelake had previously secured board support for an offer of £6.90 per share, valuing the airline at around £5.5 billion.

Apollo Global moves a step closer to owning easyJet

With Apollo’s firm offer on the table, process now begins to gain approval of the sale from the wider shareholder group.

Apollo and easyJet intend to implement the transaction through a court-approved scheme of arrangement. Shareholders must vote on the proposal, while the acquisition will also require regulatory approvals and High Court sanction.

If those conditions are met, easyJet would be delisted from the London Stock Exchange and re-registered as a private company.

Apollo has secured the backing of easyJet founder Sir Stelios Haji-Ioannou and his family, who collectively own 15.31% of the airline. Rather than accepting £7.15 per share in cash, the family intends to exchange its holding for unlisted shares in Apollo’s new parent company, allowing it to remain invested in easyJet after the airline becomes privately owned.

Reporting suggests easyJet directors have also committed to vote in favour of the deal, representing a further 0.06% of share capital.

The date of the shareholder vote has not yet been announced. It will be set out in a detailed scheme document, expected to be published by early September unless the Takeover Panel agrees to an extension. Shareholders will then vote at separate Court and General Meetings.