EasyJet rejects takeover approach amid £1.2bn fundraising pushSeptember 9, 2021
Airline says unnamed bidder no longer considering an offer as company warns of drawn-out recovery
Last modified on Thu 9 Sep 2021 03.36 EDT
EasyJet revealed it had received and rejected a takeover approach as it launched a £1.2bn fundraising to see it through a slow recovery from the coronavirus pandemic.
The budget airline said it had “received an unsolicited preliminary takeover approach”, but that it was “unanimously rejected” by its board. The unnamed bidder is no longer considering an offer, easyJet said.
The aviation sector has struggled with a slow recovery in international travel amid the spread of the infectious delta variant, even as economies have bounced back.
EasyJet said it needed to raise cash to see it through a potentially drawn-out recovery, which could mean it does not recover to pre-pandemic levels until 2023. It said that UK domestic travel is already above 2019 levels, although it still expected to carry only 57% of 2019 passenger numbers during the last three months of 2021.
However, the Luton-based airline also insisted the money would allow it to buy up slots at airports vacated by other airlines, particularly in western Europe.
Shares fell 9% in early trading on Thursday, making easyJet the biggest faller on the FTSE 250.
The buyout offer means easyJet is the latest in a series of FTSE 250 firms that has been the subject of takeover interest in recent months. Some analysts have suggested that UK equity markets are systematically undervaluing British companies, allowing a series of bids for firms including aerospace manufacturers Meggitt and Ultra Electronics.
The offer was quickly rejected. Johan Lundgren, easyJet’s chief executive, said the board had “no hesitation” in rejecting the offer, but declined to say whether it was made by a rival airline or by investors, such as a private equity firm.
“The indicative proposal took the form of a low premium and highly conditional all-share transaction which, in the board’s view, fundamentally undervalued the company,” easyJet said in a statement on Thursday.
The airline’s £1.2bn fundraising drive will be accompanied by a new $400m (£290m) lending facility available for at least four years.
Lundgren said: “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.”
It is not the first time during the pandemic that easyJet has turned to shareholders to raise cash. Last June, it raised £450m in a rights issue to shore up its cash reserves.
Source: Read Full Article