EasyJet rejects takeover approach as it looks to raise £1.2bn
Rob GillEasyJet has revealed that it has rejected an “unsolicited” takeover approach as the airline launches a £1.2 billion issue of shares to bolster its finances.
The Luton-based carrier said it had received an “unsolicited preliminary takeover approach” from an unnamed bidder but this had been “carefully evaluated and then unanimously rejected”. EasyJet added the potential bidder was “no longer considering” making an offer for the airline. The Financial Times reported that the bidder was fellow low-cost airline Wizz Air.
EasyJet revealed the takeover approach as it announced a £1.2 billion “rights” issue of new shares, as well as securing a new four-year credit facility of $400 million.
The company has decided to raise more funds from investors to “protect and strengthen easyJet’s long-term positioning in the European aviation sector”.
EasyJet added that raising this money would also allow it to “take advantage of long-term strategic and investment opportunities expected to arise” after the Covid-19 pandemic, particularly as “legacy” airlines look to restructure short-haul operations.
Some of the extra cash will also be used to bolster easyJet Holidays which the company said was “a key driver of incremental profitability and revenue growth”.
Johan Lundgren, easyJet’s chief executive, added: “The capital raise announced today not only strengthens our balance sheet enabling us to accelerate our post-Covid-19 recovery plan but will also position us for growth so that we can take advantage of the strategic investment opportunities expected to arise as the European aviation industry emerges from the pandemic.
“Since the onset of the pandemic, we have undertaken decisive and robust action to restructure our operations, addressed our cost base and secured our financial position.”
The board said the takeover offer “fundamentally undervalued” the company and the proposal was of a “highly conditional nature”, which led to its rejection.
EasyJet also gave an update on trading which showed that domestic UK capacity was now higher than during 2019 while flights within the EU reached 81% of 2019’s levels.
The airline said it expected capacity for July, August and September to be around 57% of 2019 levels. This is forecast to rise to 60% between October and December 2021 compared with two years ago.
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Place of registration: England and Wales.
Company number 08723341.
Registered address: 6th Floor, 2 London Wall Place, London EC2Y 5AU
