Apollo Secures EasyJet Takeover in £5.7 Billion Deal

What Happened

EasyJet has formally agreed to a £5.7 billion takeover by US private equity firm Apollo Global Management. This agreement concluded a bidding war after rival bidder Castlelake withdrew its acquisition attempt. The deal values EasyJet shares at £7.15 each. Apollo secured the backing of EasyJet's founder Stelios Haji-Ioannou and the airline's board. The takeover is expected to be finalized by the end of March 2027.

Why It Matters

The acquisition could significantly alter shareholder rights. Investors who choose to roll their investment into the new ownership structure may see their stakes subordinated, potentially receiving no dividends while Apollo benefits from a 14% annual dividend. Non-EU investors also face the risk of compulsory share redemption to comply with EU foreign ownership regulations, though Apollo and its affiliates are exempted from these buy-back provisions. Shareholder influence on director appointments and group investments will be diminished, with key decisions likely to be steered by Apollo and Haji-Ioannou.

Background

Castlelake initially made a bid of 560p per share in mid-June, which later progressed to a 690p offer. Apollo's entry into the bidding process drove the final offer price up to 715p per share, an 81% premium to EasyJet's share price before Castlelake's interest emerged. EasyJet's share price experienced fluctuations, dropping 10% upon news of Castlelake's withdrawal but rebounding to a 3% increase on the day the Apollo deal was confirmed. The budget airline sector, including EasyJet, has faced challenges due to increased fuel costs and inflationary pressures impacting consumer spending.

Key Facts

• Apollo Global Management has agreed to acquire EasyJet for £5.7 billion.
• The agreed takeover price is £7.15 per share.
• Rival bidder Castlelake withdrew its acquisition attempt.
• Stelios Haji-Ioannou and EasyJet's board have backed the Apollo offer.
• Shareholders opting to retain their stake may face watered-down rights and no dividends.
• The takeover is anticipated to be completed by March 2027.
• EU ownership rules require airlines to be majority EU-controlled, with an "EU Trust" potentially holding up to 5% and Apollo limited to 49.9%.