EasyJet has pushed back the deadline for US asset manager Castlelake to submit an improved offer matching rival Apollo's £5.7billion takeover bid until 5pm on Friday.
The airline said it still recommends investors accept Apollo's offer, but moved Castlelake's deadline from 5pm yesterday. Both prospective buyers have been provided due diligence access to run the rule over the business.
EasyJet previously rejected four Castlelake bids, branding them "highly opportunistic" and accusing the firm of seeking a deal "on the cheap." However, easyJet agreed to a £6.90-a-share offer worth £5.5billion in early July before Apollo submitted its higher £5.7billion bid, which easyJet's board accepted as a "superior outcome" for shareholders.
"Friday's outcome will reveal if appetite for easyJet has been affected by latest events in the Middle East," said Russ Mould, investment director at AJ Bell.
Financial Pressures and Geopolitical Impact
The bidding battle comes after easyJet's share price slumped this year, leaving the airline a prime target for predators. Profits fell 70 per cent to £85million in the three months to June as the Iran war fuelled a surge in fuel prices, and customer demand fell.
A rise in late bookings during that period failed to offset a fall in reservations following the outbreak of war.
Ownership Rules and Investor Approval
Even if a formal takeover is agreed this week, questions remain over ownership structures. The European Union is reportedly preparing to review ownership rules to prevent foreign investors gaining control.
The rules still apply to easyJet after it established a subsidiary in Austria to allow it to continue to operate flights in the bloc after Brexit.
Any bid is also likely to require the backing of founder Stelios Haji-Ioannou and his family, who still have a 15.3 per cent stake.
If Apollo is successful, it would add to the private equity firm's portfolio of airlines. It part-owns Atlas Air and last year its private credit arm lent $745million to Virgin Atlantic for its slots at Heathrow airport.
