Earlier this week, easyJet’s board agreed “in principle” to accept U.S. investment firm Castlelake’s 5.5-billion-pound offer, which was the firm's fifth bid to acquire the British airline.

Following Apollo’s higher offer this Friday, easyJet said that it was “no longer minded to recommend the Castlelake proposal,” according to The Telegraph, and whether Castlelake will return with an improved bid is still uncertain.

Previous offers

At the end of June, The Portugal News reported that the British low-cost airline easyJet had rejected a third acquisition offer from U.S. investment firm Castlelake, which proposed paying around 5.2 billion pounds for a 49 percent stake in the airline.

At that time, easyJet described the bid as “highly opportunistic”, arguing it had been made while its share price was under pressure from the conflict in the Middle East and short-term earnings. The airline said the offer significantly undervalued its medium-term growth prospects, strong financial position and overall long-term value.

The takeover discussions continued, and earlier this week, Castlelake returned with an improved offer worth 5.5 billion pounds.

As previously reported by The Portugal News, the interest in airline acquisitions has fueled speculation that renewed investor appetite for European airlines could also have implications for Portugal’s planned privatisation of TAP. Analysts suggested the revised proposal reinforced confidence in the sector and could support a higher valuation for the Portuguese flag carrier.

Takeover rules

Apollo’s bid represents an 81pc premium on easyJet’s closing price the day before it first became public that Castlelake was considering an offer, and the offer price is 22pc above the highest level that easyJet shares have traded at in the last four years.

easyJet describes the bid as delivering a “superior outcome” for its shareholders, who will be able to move their existing stock holdings into Apollo’s holding company.

According to easyJet officials, “Apollo has followed easyJet for many years and continues to regard it as one of the most attractive businesses in the global aviation sector and a highly differentiated franchise with significant long-term growth potential.”

Apollo also said that it places a high value on people, “and believes that identifying and retaining key staff within the easyJet Group will be of paramount importance.”

Under takeover rules, Apollo now has until August 7 to put in a firm offer.