EasyJet has turned down a takeover offer and announced plans to raise £1.2 billion from shareholders to help with the pandemic’s recovery.
The airline said that the unsolicited bid undervalued the company, and that the unknown suitor had since dropped out.
Wizz Air, according to Bloomberg, was the winning bidder, but the airline declined to confirm it.
Instead, EasyJet’s CEO stated that the funds would be used to “accelerate our post-Covid19 recovery plan.”
Because of Covid-related travel limitations, the carrier has already raised emergency money during the crisis.
EasyJet also intends to borrow $400 million (£290 million).
The airline stated on Thursday that it was “well-positioned to emerge from the pandemic,” but that the extra cash would provide a cushion if more coronavirus-related lockdowns slowed its recovery.
As a result of the coronavirus outbreak, it has lost more than £2 billion, resulting in the company’s first-ever loss in its 25-year history.
Johan Lundgren, CEO of EasyJet, has advocated for lowering the cost of compulsory Covid testing in order to get customers booking again and the aviation business back on its feet.
He added on Thursday that the monies collected from the stock sale would help the airline’s balance sheet.
He added that it would help position the company for development as the European aviation industry recovers from the epidemic, citing a surge in client demand in areas where restrictions have been relaxed.
It also stated that it will strive to increase sales by introducing new goods such as EasyJet Holidays and a “standard plus” ticket.
The airline is in the midst of a massive cost-cutting effort, which it claims will save around £500 million in the financial year ending September 30. Despite this, the carrier decided to investigate and reject a takeover offer from an unidentified possible bidder.
On the news, EasyJet shares fell nearly 8% to 728p in early trading on the London Stock Exchange.
This morning, the company also revealed that it had received an unsolicited buyout offer, which the board had turned down. It’s easy to see why the airline is drawing bidders: just three years ago, the shares were worth £18.
The corporation is sending a veiled message to City investors by making the approach public. Supporting our cash call may be a smart idea if you don’t want to see another British company succumb to an opportunistic takeover.