Apollo outbids Castlelake for easyJet with $7.7bn offer

pollo Global Management submitted a higher offer for easyJet on 8 July, pitching £7.15 ($9.61) per share in cash and displacing Castlelake as the preferred bidder five days after the easyJet board had agreed in principle to Castlelake's £6.90 offer; the board formally switched its recommendation to Apollo on 10 July, calling the new terms a "superior outcome" for shareholders.

The Apollo offer values easyJet's fully diluted share capital at approximately £5.7bn ($7.7bn), representing an 81 per cent premium to the £3.94 closing price on 28 May, the final trading day before Castlelake's interest became public. EasyJet shares climbed as much as 15 per cent on Friday 10 July to approximately £6.75, their highest level since early 2022, though they remain below the Apollo offer price, signalling that investors continue to assess the probability of either deal closing successfully given the regulatory barriers ahead.

Apollo has pledged to retain the easyJet name by extending the existing licence with easyGroup, the vehicle of founder Sir Stelios Haji-Ioannou, who holds approximately 15 per cent of the airline's shares and collects a royalty on its revenue; that pledge removes a potential veto point at the largest individual shareholder and also addresses an EU ownership concern, since Stelios holds an EU passport. The Stub Equity Alternative, allowing eligible shareholders to roll existing shares into Apollo's investment vehicle, remains subject to further discussion and has not been finalised.

The takeover battle now operates under two parallel Takeover Panel deadlines: Castlelake must announce a firm offer or withdraw by 5pm on Monday 3 August, and Apollo must do the same by 5pm on Friday 7 August. Under the UK Takeover Code, a competing offeror is not required to withdraw because the board has switched its recommendation, meaning Castlelake can still pursue a firm offer at £6.90 or higher.

The EU airline ownership rules remain the central regulatory obstacle: EU law requires airlines operating within the bloc to be majority-owned by EU member states or qualifying European nationals, a requirement Castlelake had proposed to satisfy by partnering with Irish aviation executives Peter Bellew and Mark Breen. Apollo has said it will take "all necessary steps" to win merger clearance and any approvals relating to the EU's Foreign Subsidies Regulation, but has not yet disclosed the specific ownership structure it intends to use.

Apollo is a significantly larger institution than Castlelake: the New York-based firm manages approximately $750bn in assets and has substantial prior aviation investment including stakes in Sun Country Airlines and involvement in Atlas Air. Its ability to absorb regulatory compliance costs and sustain a multi-month UK and EU approval process is materially greater than Castlelake's, which may explain why the board characterised Apollo's terms as superior beyond the headline price difference of 25p per share.

The easyJet board has explicitly advised shareholders to take no action at this time, with any firm offer still requiring shareholder approval and the EU regulatory structure unresolved. The shares trading approximately 7 per cent below Apollo's offer price is the market's estimate of the probability that the deal completes on current terms.