EasyJet Shares Rise as Takeover Deadline Extension Keeps Bidding War Hopes Alive

Shares of EasyJet PLC (LSE:EZJ) rose on Friday as the company extended the deadline for a formal takeover offer from private equity firm Castlelake, fueling investor speculation of a potential bidding war with rival suitor Apollo Global Management.

Bidding Contest Heats Up

EasyJet announced it has moved Castlelake's deadline to table a formal offer to August 7, aligning it with the existing cut-off date for Apollo. The move ensures that both potential buyers are on the same timeline, preserving what is now a live two-bidder auction under the UK Takeover Panel's process.

The airline's board has granted both suitors access to due diligence, creating a level playing field as the deadline approaches. The market is now pricing in a higher probability that the auction could escalate before a firm offer is announced or one of the parties withdraws.

Competing Offers

EasyJet's board has already backed a proposal from Apollo, leaving Castlelake to consider a higher counter-bid. The current offers on the table are:

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• Apollo Global Management: A £5.7 billion proposal, valuing the airline at 715 pence per share. This offer has been recommended by EasyJet's board as delivering a superior outcome for shareholders.
• Castlelake: A £5.5 billion offer, equivalent to 690 pence per share.

Market Reaction and Context

In response to the development, EasyJet stock climbed 2.2% to 643.8 pence. The gain stood in sharp contrast to the broader UK market, with the FTSE 100 index trading flat, weighed down by a decline in energy stocks.

The stock's performance is attributed entirely to the takeover situation rather than a broader sector tailwind. Investors are anticipating that the competitive tension could result in a binding offer that crystallizes a substantial premium to where the shares traded before the takeover interest emerged earlier this year.