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EasyJet rejects takeover offer
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British airline EasyJet yesterday announced it had rejected a takeover approach, reportedly from rival Wizz Air, and revealed a US$2-billion lifeline as the battered aviation sector looks to recover.
No-frills carrier EasyJet said in a statement that the bid had undervalued the group.
It added that the suitor was no longer considering an offer and that the airline would now sell new shares to raise around 1.2 billion pounds (US$1.6 billion).
Bloomberg reported that the bidder had been Hungarian budget airline Wizz Air.
EasyJet meanwhile added that it had secured a new credit facility totaling US$400 million.
The coronavirus crisis and travel restrictions have rocked airlines worldwide.
In London, EasyJet noted that its 鈥渂oard recently received an unsolicited preliminary takeover approach.
鈥淭his was carefully evaluated and then unanimously rejected.
鈥淭he potential bidder has since confirmed that it is no longer considering an offer for the company.鈥
EasyJet said the 鈥渉ighly conditional all-share鈥 proposal 鈥渇undamentally undervalued the company.鈥
The rights issues would 鈥渇acilitate and accelerate the group鈥檚 recovery from the impact of the Covid-19 pandemic,鈥 it added.
Chief executive Johan Lundgren said the financing boost would also position EasyJet for growth, allowing it to take advantage of investment opportunities 鈥渁s the European aviation industry emerges from the pandemic.鈥
Traders rushed to offload EasyJet shares on yesterday鈥檚 announcements.
鈥淓asyJet shares tumbled 10 percent after announcing a 1.2-billion pound rights issue and disclosing that it had turned down an unsolicited takeover offer,鈥 noted Neil Wilson, chief market analyst at Markets.com.
The airline鈥檚 need for fresh capital is 鈥渁 sign of the ongoing trouble in the sector,鈥 he added.
In the group鈥檚 final fiscal quarter, or three months to the end of September, EasyJet expects to fly just over half of the capacity seen two years earlier before the pandemic erupted.
Mirroring rivals, the carrier last year slashed costs and flights as the deadly pandemic ravaged global aviation industry.
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