Apollo set to buy EasyJet for $7.7bn after Castlelake pulls out

EasyJet shares rose about 3.1% in London on Thursday after Castlelake abandoned its pursuit of the UK budget airline, leaving Apollo Global Management as the likely buyer. Castlelake, in a statement to the London Stock Exchange, said it had decided not to make an offer after careful consideration. The news initially sent EasyJet down more than 6% before it rebounded.

Apollo is now expected to take the carrier private in a deal valuing it at around $7.7 billion, with completion slated for the end of the first quarter next year. Shareholders would receive £7.15 ($9.63) per share — a 54% premium to the February 27 closing price, the last trading day before the current Middle East conflict began.

Apollo made its offer last month, just days after EasyJet said it had agreed in principle to a Castlelake bid worth $7.3 billion. Castlelake's proposal had been an upgrade from an earlier $6.64 billion offer that EasyJet turned down in June. Private equity interest has helped push EasyJet shares up almost 50% by Wednesday's close. The 31-year-old airline, with valuable slots at Gatwick, Paris and Geneva, is seen as a strong takeover target.

EasyJet CEO Kenton Jarvis welcomed Apollo's commitment, saying its aviation experience makes it a strong partner. Apollo's Alex van Hoek said the firm supports EasyJet's role in European connectivity and the value its employees bring.