Apollo Global Management has successfully outbid Castlelake for easyJet with a cash offer of £7.15 per share, valuing the airline at approximately £5.7 billion ($7.7 billion). This offer represents an 81% premium over easyJet's closing price of £3.94 on May 28, the day before Castlelake's interest became public. easyJet's board has indicated it is now inclined to recommend Apollo's bid, shifting away from an earlier agreement with Castlelake, which had offered £6.90 per share.
However, both bidders face significant regulatory challenges primarily due to EU law, which mandates that airlines operating within the bloc must be majority-owned and effectively controlled by EU member states or qualifying European nationals. Castlelake had proposed to address this by partnering with Irish aviation executives Peter Bellew and Mark Breen to hold a controlling stake through an EU-based company. Apollo has stated its commitment to taking "all necessary steps" for merger clearance and compliance with the EU's Foreign Subsidies Regulation, though it has not yet detailed its specific ownership structure to meet the EU requirements.
Investors remain cautious, as evidenced by easyJet shares trading around £6.75, which is below Apollo's offer price. This signals that the market is pricing in a significant probability that the deal might not close on current terms due to the unresolved regulatory hurdles. Apollo has until August 7 to make a firm offer, while Castlelake has until August 3 to decide whether to raise its bid or withdraw. Apollo has also pledged to retain the easyJet name through a license extension with easyGroup, owned by founder Sir Stelios Haji-Ioannou, who holds about 15% of the airline and is an EU passport holder.
