EasyJet has agreed to a £5.7 billion (US$7.67 billion) takeover by US private equity firm Apollo Global Management after rival bidder Castlelake announced on Thursday that it would no longer pursue its attempted acquisition of the airline.
The deal will see Eagle Bidco, a firm indirectly owned by the Apollo Funds, take over the UK-based budget carrier. Bidco submitted a formal offer of £7.15 per share in cash on Thursday, having first proposed the offer last month after Castlelake, another US firm, had made multiple offers for the airline.
The agreement comes 24 hours ahead of a deadline set for both parties to submit final offers, with Castlelake deciding instead to drop out.
Commenting on the acquisition, EasyJet non-executive chair Stephen Hester in a statement said: "The EasyJet Board has carefully evaluated the proposal from Apollo alongside EasyJet's standalone prospects. While we remain confident in the strength of our business and the opportunities ahead, we believe this offer appropriately recognizes the quality of the business we have built and delivers immediate, certain and attractive value for shareholders."
Under the agreement, EasyJet shareholders will have the option to either sell or transfer shares for a combined holding of up to 49.9 percent in the company. This includes EasyJet founder Stelios Haji-Ioannou and his family, who will retain their shareholding under the new ownership structure. Apollo will hold up to 49.9 percent, while up to 5 percent will be held by an EU Trust linked to a management incentivization plan.
European airlines currently are required to be majority-owned and controlled by EU countries or citizens. This includes UK-based airlines, such as EasyJet, that operate flights entirely within the EU. As part of the agreement, Apollo's Bidco said it is committed to "take all necessary steps" to comply with existing EU rules.
Apollo and Bidco said they are "highly supportive" of EasyJet management's strategy and see "a significant opportunity to accelerate the operational and commercial ambitions for the EasyJet Group, and ultimately enhance the growth profile of the business."
The companies added that, in the context of continued market and macroeconomic uncertainty, EasyJet's next phase of growth and development would be best served as a private company.
"Private ownership would provide access to incremental capital and enable longer-term business and strategic planning, allowing management to invest with greater flexibility and pursue opportunities that may take longer to realise than is typically possible in the public markets. This approach is consistent with Apollo's long-term investment philosophy and experience supporting businesses through transformational growth," they said in a statement.