Following Apollo Global Management's move to take EasyJet private, analysts suggest budget carrier Jet2 may attract similar interest.
Key facts
- •Apollo Global Management's deal for EasyJet values the airline at roughly $7.7 billion.
- •Castlelake withdrew its competing $7.3 billion bid for EasyJet on Thursday.
- •Jet2's share price has risen about 60% from its recent low point.
- •Analysts suggest U.K. market valuations make London-listed companies attractive to private equity.
- •Jet2 declined to comment on the speculation regarding a potential takeover.
Private equity interest in the European airline sector is rising after Apollo Global Management moved to acquire EasyJet. Analysts have identified U.K. budget carrier Jet2 as a potential takeover target due to its similar low-cost business model. This comes as investors look to capitalize on U.K. equity valuations that have lagged behind global peers.
By the numbers
Market Valuation and Interest
Anna Macdonald, investment strategy director at Hargreaves Lansdown, noted that Jet2's share price has increased by approximately 60% from its previous low, when it traded at a price-to-equity ratio of 6-7 times. While Jet2 shares saw a 0.5% rise in Friday afternoon trading, a company spokesperson stated they do not comment on market rumors or speculation.
The EasyJet Acquisition
Apollo Global Management is expected to take EasyJet private in a deal valuing the airline at approximately $7.7 billion. This follows the withdrawal of a $7.3 billion bid by rival firm Castlelake on Thursday, which cleared the way for Apollo's acquisition. EasyJet shares fell 0.48% in Friday afternoon trade following a 2.8% gain in the previous session.
Industry Challenges
The airline sector remains under pressure due to its cyclical nature, low margins, and heavy regulation. Macdonald suggested that private ownership could lead to changes in financing strategies to reduce capital intensity, potentially resulting in better consumer pricing.
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This article was independently rewritten by ManyPress editorial AI from reporting originally published by CNBC Europe.
