EasyJet weighs Apollo bid at $7.7 billion after Castlelake offer

EasyJet said Friday it is assessing a takeover proposal from Apollo Global Management that values the budget carrier at about £5.7 billion, or roughly $7.66 billion. The approach added a second private-equity bidder for the airline and sent EasyJet shares up 13%, CNBC reported.

Under Apollo’s cash proposal, EasyJet investors would receive £7.15, or $9.61, for each share they own, according to the company. Apollo said that price represents an 81% premium to EasyJet’s closing price of £3.94 on May 28, the last business day before the offer period began in connection with Castlelake’s proposal.

The new approach follows EasyJet’s acceptance on Monday of a $7.3 billion takeover offer from Castlelake, the private equity firm, CNBC reported. The competing bids put the UK-listed airline at the centre of a contest for ownership at a time when financial sponsors are seeking assets with cash-generating potential and exposure to European travel demand.

How Apollo’s alternative structure would work

Apollo’s proposal includes a cash option and what it calls a Stub Equity Alternative, according to EasyJet. That structure would allow shareholders to exchange their existing EasyJet shares for an interest in the vehicle through which Apollo funds would own the airline.

For investors, a stub equity structure can preserve some exposure to a company after it is taken private, rather than requiring a full exit for cash at the offer price. In this case, EasyJet said the alternative would allow shareholders to retain voting rights, though the detailed terms remain subject to further talks.

The cash offer provides the clearer valuation benchmark: £7.15 a share and an implied equity value of £5.7 billion. The stub option is less fully defined because its economics would depend on the final terms of the acquisition vehicle, the rights attached to the equity and any restrictions on transfer or liquidity.

Castlelake bid sets up contest for control

EasyJet’s statement means the company is weighing Apollo’s terms while Castlelake’s offer remains part of the takeover process. CNBC described the situation as a bidding war after both Apollo and Castlelake submitted offers for the carrier.

EasyJet operates in the European low-cost airline market, where investors closely track fuel costs, airport capacity, consumer travel demand and balance sheet resilience. A take-private deal would shift control of the airline from public shareholders to financial sponsors, subject to the completion of any agreed transaction and the relevant approvals.

EasyJet did not announce final terms for Apollo’s stub equity alternative, and the company said further discussion is required. The airline also did not state in the reported announcement that it had reached a definitive agreement with Apollo.

This story draws on original reporting from CNBC.