US private equity firm Apollo enters bidding war for easyJet with £5.7bn offer | easyJet

EasyJet’s board has given the green light to a possible £5.7bn bid from US private equity firm Apollo as the low-cost airline is the subject of a surprise bidding war.

The company’s board said on Friday it was “considering recommending” to shareholders a potential all-cash offer that would value the company at £7.15 per annum.

Earlier this week, easyJet’s board accepted Castlelake’s £6.90 deal “in principle” after the US private equity firm increased its bid for a fifth time. But analysts said the £5.5bn bid undervalued easyJet.

On Friday, the airline’s board changed course to recommend Apollo’s approach. “easyJet’s board of directors has carefully considered the proposed cash offer together with its financial advisors and has unanimously concluded that the financial terms of the proposed cash offer are such that it can be recommended to easyJet shareholders,” the company said. “Accordingly, easyJet’s board no longer intends to recommend Castlelake’s offer.”

The latest offer also allows existing shareholders to continue investing under Apollo’s ownership if the deal goes ahead, rather than having to divest if the deal is canceled.

Apollo has signaled that it will support easyJet’s current strategy and management and has no intention of splitting the company.

“Apollo believes in easyJet’s existing strategy to develop and strengthen its low-cost airline model, most importantly through the upgrade of the fleet, the development of ancillary service and loyalty offerings and the scaling of holidays into a structurally differentiated revenue stream,” the company said.

“Apollo recognizes the important contribution that easyJet employees, as well as easyJet’s management team, make to the company’s success. Apollo places great value on people and believes that identifying and retaining key personnel within the easyJet group will be of great importance.”

He has until August 7 to submit a firm offer to the airline.