Apollo Launches Rival US$7.7 Billion Takeover Bid for easyJet

US investment firm Apollo Global Management has launched a £5.7 billion (US$7.7 billion) takeover proposal for easyJet, triggering a potential bidding war for one of Europe's largest budget airlines.

The easyJet board of directors announced Friday it will back Apollo’s cash proposal of £7.15 per share (US$9.66), officially withdrawing its previous support for a rival £6.90-per-share offer from Castlelake. The pivot comes just days after easyJet had agreed to Castlelake’s £5.2 billion (US$7.0 billion) in-principle proposal over the weekend. Following the announcement, Castlelake issued a brief statement noting the development and stating it was "considering its options in respect of its possible offer."

Apollo has until 17:00 GMT on August 7 to solidify its proposal into a firm offer or walk away, while Castlelake faces a regulatory deadline of August 3.

The bidding activity reflects a significant premium over easyJet's recent valuation. The airline stated that Apollo’s offer represents an 81% increase from its share price of £3.94 (US$5.32) on May 28, the final day of trading before Castlelake’s initial acquisition interest became public. Castlelake had previously made a series of four offers starting at 560p per share (US$7.56), all of which were rejected by the board. EasyJet had previously labeled those initial attempts as "highly opportunistic," arguing its valuation had been "temporarily depressed" by the broader impact of the war in Iran on the aviation sector.

Following the news of Apollo's proposal on Friday, easyJet shares rose as much as 16%, climbing to £6.8 (US$9.18 ) by 1433 GMT. While this marks the stock's highest level since February 2022, it remains below Apollo's entry offer price.

"The bidding war now comes down to price. The spotlight now turns back to the original suitor [Castlelake] to see if it will dig even deeper to beat Apollo. Shareholders will be putting their feet up and enjoying the ride," said Dan Coatsworth, head of markets, AJ Bell.

Market analysts noted that British corporations are increasingly drawing foreign acquisition bids due to perceived undervaluation. "It is no surprise that a second suitor has appeared for easyJet," said Chris Beauchamp, chief market analyst, IG. "The potential for the business remains substantial despite the underwhelming performance of recent years." However, Beauchamp warned of structural risks associated with the transaction: "While shareholders will cheer a bidding war that increases the windfall, the risk of piling on debt into the business as part of the process runs the risk of underperformance in the future."

An anonymous easyJet investor commented to Reuters that it was "reassuring that multiple private investors can see the undervaluation in the shares that public investors have seen for some time."

A central challenge for any non-European acquisition of easyJet is compliance with European Union majority ownership regulations. Under EU law, airlines operating within the bloc must be majority-owned and controlled by EU citizens. To circumvent this hurdle, Castlelake had outlined a strategy to partner with two EU nationals, businessmen Peter Bellew and Mark Breen, who would establish an EU-based entity to hold majority control of the airline. For its part, Apollo stated it is committed to taking "all necessary steps" to secure required merger controls and EU subsidy-related clearances.

Additionally, Apollo is offering eligible easyJet shareholders an equity roll-over option, allowing them to convert their existing stakes into the private acquisition vehicle to retain their voting rights.

The two companies defended the financial merits of the new proposal in a joint statement, asserting, "The proposed cash offer delivers a superior outcome for easyJet shareholders by providing a higher cash value than Castlelake's latest proposal."

Structurally, Apollo intends to maintain easyJet's existing core management team and preserve its current corporate trajectory, which centers on expanding passenger capacity and scaling up its dedicated holidays segment. In contrast, Castlelake's stated strategy had focused primarily on supporting easyJet’s ongoing fleet modernization program to replace older aircraft with new Airbus models.

Industry analysts point to easyJet's established operational framework and infrastructure as a primary driver for the private equity interest. The airline owns a fleet of more than 350 aircraft, employs over 19,000 people, and operates roughly 1,200 routes across 35 European countries. It also holds highly coveted take-off and landing slots at key hubs including London Gatwick and Paris Charles de Gaulle.

"You can jump in and get a turnkey operation playing in a world where it is going to be very, very difficult for others to come in and play at the same level," said Augusto Viansson Ponte, director, Alton Aviation Consultancy.

Susannah Streeter, chief investment strategist, Wealth Club, highlighted that easyJet's resilient European network, stable balance sheet, and ancillary businesses make it an attractive target despite broader macroeconomic pressures such as elevated jet fuel costs. "Package holidays generate higher margins and more predictable revenues than airline tickets alone," Streeter noted, adding that "one of Apollo's biggest attractions" is this fast-growing holiday division. For current consumers, Streeter stated, "it's very much business as usual for now, with flights, bookings and loyalty schemes unaffected while any deal works its way through the regulatory process."

Conroy Gaynor, senior consumer analyst, Bloomberg Intelligence, observed that while Apollo has "more explicitly" endorsed the carrier's growth strategy, "the need to improve the airline margin suggests any success in lowering costs will not necessary translate to lower fares."

Apollo also confirmed plans to retain the easyJet brand name by continuing the existing licensing contract with easyGroup, which is controlled by the airline's founder, Sir Stelios Haji-Ioannou. Sir Stelios founded the carrier in 1995, launching its inaugural flights from London Luton to Glasgow and Edinburgh in November of that year before expanding to international destinations in 1996. The Haji-Ioannou family remains the airline's largest single shareholder block with an approximate 15% stake, and receives a 0.25% royalty fee on easyJet's total revenues for the use of the "easy" brand identity. Sir Stelios declined to comment on the active bidding process.

"The proposed bid not only increases the offer to shareholders, but from an easyJet board perspective supports the airline's current growth strategy," said airline analyst John Strickland.