A European Union official said the EU will review its airline ownership guidelines to prevent foreign investors from gaining control of airlines. This review comes during a bidding war for easyJet’s takeover between two U.S. investment firms, Castlelake and Apollo Global Management.
Bidding for easyJet
EasyJet dropped its support for Castlelake’s £5.5 billion offer in favour of Apollo’s £5.7 billion offer earlier this month.
Apollo has not explained how it would meet the EU’s majority local ownership requirements.
Castlelake has previously claimed its easyJet takeover would involve a partnership with Irish aviation executives Peter Bellew and Mark Breen, who would hold 51% ownership and control of the airline.
Keeping Ownership Within the EU
The probable result of the review would “protect strategic autonomy”, according to the official. This would ensure the control of regional airlines remains within the EU.
The official told Reuters:
“This is to ensure that foreign investors don’t have full control. We need to make sure we have sufficient headroom when it comes to control.”
The EU official said easyJet, Castlelake and Apollo had not yet spoken to the European regulators about the details of the proposed deals. EasyJet, Castlelake and Apollo have declined to comment.
The official added:
“The concern is that the industry is on the wrong foot, thinking that we no longer enforce the rules strictly. People will go down the wrong alley because there’s a wrong perception.”
Dudley Shanley, a Goodbody Stockbrokers analyst, told Reuters that:
“The issue seems to be that while the two bidders seem willing to allow 51% of the voting rights to remain with European investors, the EU is concerned that the effective control of the company would be outside of the EU.”
Apollo has until Aug. 7 to formalise a deal and disclose how it plans to comply with the EU’s airline ownership rules.
What do you think of this bidding war and the review of the EU’s airline ownership guidelines? Let us know in the comments!
