Apollo Buys EasyJet for $7.2 Billion in Major Take-Private

Apollo Global Management has successfully negotiated a recommended cash offer to acquire easyJet, a prominent European airline, in a transaction valued at approximately $7.2 billion (£5.7 billion). This significant deal marks a major European take-private transaction and concludes a swift, four-week bidding process that saw the airline's board shift its recommendation from a rival bidder to Apollo's superior proposal.

The acquisition vehicle, Eagle Bidco, filed its firm intention to make an offer, signaling the end of a two-month engagement. Shareholders in easyJet are set to receive £7.15 in cash per share. This represents a substantial premium, an 81% increase over the closing price on May 28th, the day before initial interest from Castlelake surfaced. The offer also reflects an 80% premium to the 90-day weighted average trading price, underscoring the attractive terms presented to existing investors.

Navigating the complexities of European aviation ownership regulations was a key consideration. To comply with EU rules requiring majority ownership and control by EU nationals, Apollo has structured the deal to include an unlisted Rollover Share alternative. Eligible easyJet shareholders can opt to receive these shares in a new parent entity, Topco, instead of cash. This innovative structure is crucial for maintaining regulatory compliance for the airline's operations.

The Haji-Ioannou family, the airline's founding shareholders, have provided irrevocable undertakings to elect for the Rollover Share alternative for their approximately 15.31% stake. This commitment is instrumental in providing Apollo with a stable, EU-national anchor shareholder base, significantly easing the path to regulatory approval. Following the transaction's completion, expected by the first quarter of 2027, Topco's ordinary share capital will be distributed among rollover shareholders (45.1%-49.9%), Apollo Funds (up to 49.9%), and an EU Trust (up to 5%) for management incentives.

Sir Stephen Hester, Chairman of easyJet, stated that the board's unanimous recommendation stems from a formal process that evaluated multiple proposals. He highlighted the company's recent progress and confidence in its future, while acknowledging that the offer provides "immediate, certain and attractive value." easyJet has demonstrated robust financial growth, with pre-tax profits increasing by approximately 46% between FY2023 and FY2025, and has ambitious targets for its Holidays division and fleet modernization, which are expected to enhance fuel efficiency and capacity.

Apollo sees considerable potential for operational enhancements within easyJet, including optimizing revenue management, expanding ancillary services, strengthening loyalty programs, refining network strategy, and exploring new distribution channels. These areas are ripe for longer-term investment strategies that private ownership can facilitate. The transaction is subject to various approvals, including shareholder consent, aviation authority non-objections in the UK, Austria, and Switzerland, merger control clearance in several jurisdictions, and foreign direct investment approvals across multiple European nations.