Budget airline easyJet has agreed to a £5.7 billion acquisition by a US investment giant, Apollo Global. The Luton-based airline disclosed reaching an “agreement in principle” with Apollo Global, outbidding Castlelake, another American contender. Despite this, Castlelake may still return with a counter offer. Following the news, easyJet’s shares surged by 14% to 670p in early trading on Friday, indicating investor anticipation of further developments.
Under Apollo’s proposal, easyJet shareholders could receive £7.15 per share. Apollo’s move follows discussions between easyJet and Castlelake, a private credit group, regarding a potential takeover. The implications of the deal, if finalized, for easyJet’s customers and employees remain uncertain.
This potential acquisition aligns with a trend of UK-listed companies being acquired by foreign entities, going private, or relocating their listings overseas. EasyJet highlighted that Apollo’s offer represents an 81% increase from the closing price of £3.94 per share on May 28, prior to Castlelake’s interest surfacing. The offer also surpasses the share price performance over the past four years.
Struggling to recover from setbacks during the Covid crisis, easyJet has lagged behind competitors like Ryanair and British Airways owner IAG. Apollo’s interest in easyJet stems from its perception of the airline as a strong player in the global aviation sector with substantial long-term growth prospects, particularly in the rapidly expanding easyJet Holidays business.
Notably, easyJet’s founder, Sir Stelios Haji-Ioannou, established the airline in 1995 to provide affordable European travel options. Sir Stelios and his family retain a 15.3% stake in the airline. Analysts view Apollo’s bid as a significant development, with Aarin Chiekrie from Hargreaves Lansdown indicating that Apollo’s offer is now the favored choice pending a formal bid by August 7. However, Castlelake could still present improved terms before a final decision is made.
Chris Beauchamp, IG’s chief market analyst, noted that easyJet’s potential remains promising despite recent performance challenges. While shareholders may benefit from a bidding war, the prospect of increased debt accumulation during the acquisition process poses future performance risks. Apollo’s previous investments in the UK include Evri, a major parcel delivery company acquired in 2024.