Under the terms of the deal, EasyJet shareholders will receive 7.15 pound a share, a price Apollo had tabled last month after the airline’s board initially recommended a rival offer from Castlelake.
Castlelake had been given until 5 pm on Friday to table a final bid but declined to escalate the contest, saying it was “very appreciative” of its engagement with the EasyJet board.
Founder Sir Stelios Haji-Ioannou and his family will retain a shareholding under the new ownership structure, with existing investors offered the option to sell or transfer stakes up to a maximum of 49.9%.
“Having carefully reviewed the proposal by Apollo, my family members and I have decided to support the recommended acquisition announced by the easyJet board,” Haji-Ioannou said in a separate statement.
The deal, which comes amid the aviation industry grappling with rising costs from the Iran war, has put easyjet among the string of London-listed companies that have been taken private by private equity firms and largely American companies in recent years as the FTSE 100 share index has traded at a discount to its United States counterpart.
Apollo has pledged to retain EasyJet’s United Kingdom and EU head offices and said it does not intend to cut jobs in the first 12 months after completion, though a limited number of roles tied to the airline’s public listing could be affected if it delists.
The alternative asset management giant, which manages about USD 1.05 trillion in assets and has previously invested in Sun Country Airlines, Aeromexico and Atlas Air, will also accelerate the low-cost carrier’s commercial ambitions, including expanding its fast-growing holidays business, under the new private ownership.
EasyJet Non-Executive Chair Stephen Hester said the board had “carefully evaluated” the proposal against the airline’s standalone prospects and concluded it offered “immediate, certain, and attractive value” for shareholders.
“While we remain confident in the strength of our business and the opportunities ahead, we believe this offer appropriately recognises the quality of the business we have built and delivers immediate, certain and attractive value for shareholders,” he remarked.
Chief executive Kenton Jarvis said Apollo’s experience in aviation made it “a strong partner” as the airline sought to accelerate growth. Apollo’s European private equity lead, Alex van Hoek, described EasyJet as a leader in European aviation built on a “differentiated market position” and a strong brand.
Sir Stelios said he backed Apollo’s plans “to create more growth” and intended to remain a long-term major shareholder.
The agreement follows a turbulent year for EasyJet, whose shares slumped after quarterly profits fell 70% to 85 million pound in the three months to June, hit by rising fuel costs linked to the Iran war.
Castlelake had earlier offered 5.5 billion pounds, only for Apollo to trump it days later with its winning 5.7 billion-pound bid.
AJ Bell’s Danni Hewson said the price remained “woefully short” of EasyJet’s pre-pandemic highs, though shares still rose on the news.
However, investors and regulators will have their keen interest in how Apollo complies with EU rules on airline ownership, given easyJet’s bases across the bloc. EasyJet’s flying rights within the bloc will depend on the airline remaining majority owned and controlled by EU interests.
EasyJet’s main base is in Britain, and Britain’s Civil Aviation Authority said it has engaged with the parties involved in the deal.
However, analysts feel that a move to take the low-cost British carrier private might shield it from some of the fallout of the Iran war.
“A delisting would allow easyJet to be less tied to quarterly earnings reporting and less exposed to the turbulence the sector is likely to face once higher jet fuel costs begin to be reflected more clearly in fares,” said Andrea Giuricin, CEO of transport consultancy TRA Consulting, while interacting with the Reuters.