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(Sharecast News) - US investment firm Castlelake said on Thursday that it was abandoning its pursuit of easyJet, clearing the path for a 5.7bn takeover by Apollo.
"Castlelake is very appreciative of the constructive engagement with the easyJet board and management team, and would like to thank them for their time and consideration of this potential transaction," it said.
The statement from Castlelake was swiftly followed by confirmation from easyJet that it has agreed to be taken over by Apollo for 715p per share in cash.
The offer represents a premium of 81% to the closing easyJet share price on 28 May, which was the last business day before the start of the offer period relating to Castlelake.
EasyJet non-executive chair Stephen Hester said: "We have made significant progress in recent years, executing our clear strategy to deliver attractive long-term value for shareholders. We have strengthened our network, continued to improve operational performance and built a differentiated and fast-growing Holidays business while achieving strong customer satisfaction and high employee engagement.
"The easyJet board has carefully evaluated the proposal from Apollo alongside easyJet's standalone prospects. While we remain confident in the strength of our business and the opportunities ahead, we believe this offer appropriately recognises the quality of the business we have built and delivers immediate, certain and attractive value for shareholders."
Shares of the budget airline closed up 2.8% at 670p.
Danni Hewson, head of financial analysis at AJ Bell, said: "It's been a tough few months for airlines as the cost of jet fuel shot up and nerves about summer shortages impacted many people's booking decisions.
"Having fewer bums on more expensive seats has created the kind of turbulence that private equity is always sensitive to, and as EasyJet's share price dropped the European airline began to look like an increasingly tasty morsel. Cue not one, but two suitors entering the ring, with Castlelake unsuccessful after seemingly being gazumped following months of negotiations which almost got across the line.
"In the end it was Appollo that came up with the magic number of 7.15 per share. That's a significant premium to where EasyJet's shares were trading before the Iran war, but it's a figure that's still woefully short of the company's pre-pandemic highs.
"Although there are no guarantees those halcyon days will return, with so many pressures on the airline. EasyJet is still recovering from those months when planes were grounded, despite the robust recovery as people rediscovered their love of travel and placed holidays firmly in the 'required spending' bracket.
"Whilst there are still significant hurdles for this deal to clear, not least European regulators with strict requirements for ownership of airlines, the potential loss of another well-known name from London markets will be seen as a blow. Air travel might not be as sexy as space travel, but retail investors understand it and names like EasyJet can't easily be replaced."