Private-equity giant Apollo launches $7.7B offer for budget airline setting up potential bidding war

Investment firm Apollo Global Management launched a £5.7 billion ($7.7 billion) bid for easyJet on Friday, trumping a rival offer from Castlelake and setting up a potential takeover battle for one of Europe’s biggest airlines.EasyJet’s board said it would back Apollo’s £7.15-a-share proposal, withdrawing support for Castlelake’s £6.90-a-share offer ($7.3 billion), which the parties had agreed in principle only days earlier.Apollo’s proposal, which it needs to firm up by early August, marks a bold attempt to outmaneuver Castlelake and take control of the three-decade old budget airline that has seen its stock price halve since the 2020 COVID-19 pandemic.“It’s no surprise that a second suitor has appeared for easyJet,” said Chris Beauchamp, chief market analyst at investing and trading platform IG.“The potential for the business remains substantial despite the underwhelming performance of recent years.”Castlelake said it was weighing its options regarding its possible offer, without providing any further details.Global airline shares have been hammered by spiraling jet fuel prices triggered by the war in Iran, with worries growing over the stability of the industry’s balance sheets.EasyJet shares rose as much as 16% to £6.8, their highest since February 2022, though still below Apollo’s offer price, with some investor concerns still over regulatory hurdles to any deal.An easyJet investor, who requested anonymity, said it was “reassuring that multiple private investors can see the undervaluation in the shares that public investors have seen for some time.”European Union majority ownership rules require airlines that operate in the bloc to be majority EU-owned, a key hurdle for any non-EU acquisition of a European airline, analysts said.Davy analyst Stephen Furlong, however, said both proposals could ultimately gain regulatory approval, with the key question now becoming price.Apollo said it was committed to taking “all necess...