Apollo, which agreed a deal to acquired Trafalgar, Contiki and Uniworld parent The Travel Corporation in 2024, has upped the ante with an offer worth £7.15 per share.
As a result, easyJet's board said it was "no longer minded" to recommend Castlelake's £6.90 per share proposal, which was agreed in principle earlier this week.
The board said Apollo's bid, which was disclosed on Friday (10 July), would deliver "a superior outcome" for easyJet shareholders.
It added: "The easyJet board further believes the proposed transaction offers an attractive combination of value, strategic alignment and long-term stewardship of the business."
After agreeing the deal in principle, Apollo now has until 5pm on Friday 7 August to confirm a firm intention to make an offer for easyJet or not.
Opinion: easyJet makes for an attractive prospect at a bargain price
A statement issued to the London Stock Exchange on Friday read: "Apollo has followed easyJet for many years and continues to regard it as one of the most attractive businesses in the global aviation sector and a highly differentiated franchise with significant long-term growth potential."
Notably, the statement states Apollo will place specific focus on easyJet holidays and developing a loyalty scheme, which was laid out in May.
"Apollo believes in easyJet’s existing strategy of evolving and strengthening the low-cost carrier model, most notably through up-gauging the fleet, enhancing the ancillary and loyalty offering, and scaling [EasyJet] Holidays into a structurally differentiated earnings stream."
It added: "As a leading aviation investor with a longstanding track record of creating value across the airline industry, Apollo believes that, through the proposed transaction, it is uniquely positioned to deliver the best stewardship of easyJet, supporting easyJet in furthering its business plan and the delivery of its long-term strategic objectives."
- 28 February – US and Israel attack Iran, shutting Middle East airspace; turmoil sends airline stocks tumbling
- 19 May – easyJet share prices fall to a one-year low of £3.40, down from around £5.80 a year earlier
- 29 May – Castlelake formally discloses its interest in easyJet
- 12-23 June – Castlelake makes four bids for easyJet, starting at £5.60 a share rising to £6.25 and eventually to £6.50 – all four are rejected
- 25 June – easyJet agrees to share "limited commercial information" with Castlelake to encourage a stronger bid with a 5 July deadline
- 5-6 July – Castlelake returns with an offer worth £6.90 a share, valuing easyJet at around £5.2 billion; easyJet and Castlelake on 6 July announce "agreement in principle", with Castlelake given until 5pm on 3 August to disclose a firm intention to make an offer or pull out
- 10 July – Apollo enters the race with a £5.7 billion £7.15 per share offer, which easyJet's board agrees to in principle, giving Apollo until 5pm on 7 August to firm up its offer. The board also tacitly turn down Castlelake's proposal
Apollo's intervention would, for now, appear to end Castlelake's protracted interest in easyJet, which dates to late May.
The US firm made several bids for easyJet over a two-week bid, drawing the board's ire for what it perceived to be an attempt to acquire easyJet "on the cheap".
However, after agreeing to supply Castlelake with "limited commercial information" in the hope of attracting a better offer, Castlelake came back at the weekend with its £5.2 billion proposal.
Apollo, though, will face the same challenges progressing a deal for easyJet, predominantly an EU stipulation that the airline must be at least 51% European owned.
