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(Sharecast News) - JPMorgan upgraded easyJet on Friday to 'neutral' from 'underweight' as it hiked the priced target to 715p from 360p to bring it in line with the agreed takeover price by Apollo.
JPM said the bid structure will see existing shareholders have the ability to roll shares - which has been committed to by founder Stelios Haji-Ioannou - with Apollo owning a maximum of 49.9% in order to comply with EU Ownership & Control rules.
"Apollo has stated that it regards easyJet as having a differentiated franchise with a strong network and market positions, whereby the next level of growth is better served as a private company," JPM said. "It has also largely backed the existing easyJet strategy (rather than any type of break-up of the business), which in our view means minimal change for the industry and its structure, at least near-term if the transaction completes."
The bank said the risk longer-term for peers is that Apollo transforms easyJet into a more competitive airline in terms of product, cost base and in particular segments like corporate traffic or package holidays.
JPM said there are no anti-trust risks from the transaction given it is not a strategic buyer.
US investment firm Castlelake announced on Thursday that it was abandoning its pursuit of easyJet, clearing the path for a 5.7bn takeover by Apollo.
At 0930 BST, easyJet shares were down 0.4% at 667.14p.
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