According to reports, multiple investors are considering bidding for easyJet, with some looking to buy a majority stake to get full ownership.
Shares in easyJet increased after reports were floating around that the Swiss-based shipping company MSC was considering buying Europe’s second-largest budget airline. The stocks jumped 12% which is easyJet’s biggest share increase in three years.
According to reports, multiple investors are considering bidding for easyJet, with some looking to buy a majority stake to get full ownership. However, easyJet shares have since lost their earlier gains after the company declined to comment on the market speculation, and MSC refused to get involved in the talks. Even so, shares traded remained up 4.5%.
It is not the first time the budget airline has attracted takeover interest. In 2021, the company rejected an offer from its competitor Wizz Air, as it was still recovering from the coronavirus pandemic. At the time, the company stated that it had received an unsolicited preliminary takeover offer, but the board collectively rejected it.
Since the pandemic began, the easyJet company has requested shareholders for more than £1.6 billion, following a £450 million rights issue to bolster its cash reserves. easyJet stated that it needed to raise more cash to see it through a potentially slow recovery, warning that it might not recover to pre-pandemic levels until 2023. It stated that domestic travel in the United Kingdom was already above the 2019 figures, although the company expected to carry only 57% of its 2019 passenger numbers by the end of the final quarter of 2021.
Dan Coatsworth, the head of markets at the broker AJ Bell, suggested that the takeover rumors might spark interest from more potential investors. He notes that the shareholders might be frustrated that the market is offering a low valuation on the company, so it is open to a bid if the price gets attractive. However, Stelios Haji-Ioannou, easyJet’s billionaire founder and largest shareholder with a stake of about 15% in the company, could stand in the way, as he would likely hold out till he gets a high offer.
The company is based in Luton and employs more than 16,000 people around the world. It is one of Europe’s largest budget airlines, ranking just behind Ryanair and ahead of Wizz Air.
Despite all this, its shares are trading at less than half their pre-pandemic levels, as the company continues to face challenges due to volatile fuel prices, weak consumer confidence, and supply chain issues.
The company told its investors that it was on track to achieve more than £1 billion in pre-tax profit in the medium term. Last year, the company reported making £602 million in pre-tax profit on £9.3 billion in revenue.
Another thing to note is that the London stock market has suffered in recent years due to several major companies wanting to exit, and the takeover of easyJet could be another blow for the stock market. The high-profile companies that wanted to leave were construction equipment rental company Ashtead, the gambling company Flutter Entertainment, and the building materials supplier CRH. Most recently, the online payment company Wise announced that it would move its main share listing to the United States, which was another blow for the stock market.
It is one of the largest financial technology companies in the country and has been listed on the London Stock Exchange since 2021. It now aims to list in the US and UK to attract more investors and increase its value through dual listing.
MSC, based in Geneva, previously teamed up with Lufthansa in 2022 to make an offer for ITA Airways, although that bid was unsuccessful. The company also operates passenger transport divisions such as MSC Cruises and Grandi Navi Veloci.