easyJet's board has approved a potential £5.7 billion acquisition offer from US private equity firm Apollo, triggering an unexpected bidding war for the low-cost carrier.
The board announced on Friday that it would recommend the all-cash proposal to shareholders, valuing the airline at £7.15 per share.
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This decision reverses an earlier agreement in principle to accept a £6.90 per share deal from Castlelake, valued at £5.5 billion after five bid increases.
Financial analysts had indicated that the Castlelake offer undervalued the airline, prompting the board to reconsider.
Board Backs Apollo's Offer
"The easyJet board has carefully considered the proposed cash offer together with its financial advisers and has unanimously concluded that the financial terms are at a level that it would be minded to recommend to shareholders," the company stated.
"Accordingly, the easyJet board is no longer minded to recommend the Castlelake proposal."
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Apollo's proposal includes a provision allowing current shareholders to retain their investments under the new ownership structure, rather than being forced to sell upon delisting.
Apollo also expressed support for easyJet's current strategy and management team, with no plans to break up the existing corporate structure.
"Apollo believes in easyJet's existing strategy of evolving and strengthening the low-cost carrier model, most notably through upgrading the fleet, enhancing ancillary and loyalty offerings, and scaling holidays into a structurally differentiated earnings stream," the firm said.
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Apollo now has until August 7 to solidify and submit a firm offer for the airline.
