EasyJet accepts Apollo's offer and heads towards private ownership
Following months of bidding for easyJet, the airline's management has backed Apollo's offer of £7.15 per share. The deal will be carried out through Eagle Bidco, which is indirectly owned by funds managed by Apollo.
An agreement was reached just before the deadline for final bids. The other interested investor, American firm Castlelake, withdrew from the process after previously increasing its bid several times.
easyJet's management has assessed that Apollo's offer brings sufficiently attractive value to shareholders compared with continuing the company's business as an independent publicly listed carrier.
The ownership structure must satisfy European rules
One of the more complex parts of the transaction will be the ownership structure. Airlines wishing to retain full traffic rights within the European Union must meet European ownership and control rules.
Therefore, following the transaction, Apollo will not hold more than 49.9 per cent of the company. Existing shareholders will be able to transfer a portion of their shares into the new ownership structure, while the family of founder Stelios Haji-Ioannou will retain their stake. Up to five per cent of the capital is earmarked for an EU trust associated with the management programme.
Such a structure shows just how important regulatory rules still are when it comes to cross-border investments in European airlines.
Private equity could accelerate commercial changes
For the tourism industry, a more important question will be what Apollo intends to do with easyJet after the takeover.
The investor supports the existing management strategy, but sees scope for faster development of revenue management, ancillary services, loyalty programmes and network optimisation. It is particularly interesting that new partnerships and distribution models are mentioned among the growth areas, as well as the further expansion of easyJet Holidays.
This could be relevant to travel agencies, TMCs and travel tech companies. easyJet is already an important part of the European point-to-point market, and a more aggressive development of distribution and package holidays could further align the traditional low-cost model with organised travel sales.
Apollo meanwhile believes that easyJet as a private company will have greater freedom for longer-term investment without the constant pressure of the capital markets. If such capital is indeed directed towards technology, product and distribution, the change in ownership could have broader consequences than just a financial transaction.
