EasyJet deploying strategy to steal market share from rival airlines
EasyJet has confirmed it rejected a takeover offer as it set out plans to raise £1.2bn from investors in an effort to cope with a more sustained downturn in the airline industry.
The firm said the all-share approach undervalued the business, adding that the potential bidder is no longer interested in a deal.
Instead, via a rights issue, EasyJet will seek to improve its balance sheet and also seek out growth opportunities that could occur over the next few years as it expects the European airline industry to make a recovery.
By restructuring its short-haul operations, EasyJet will be looking to take market share away from IAG.
It will do this, as an example, by expanding its presence at key airports and acquiring additional landing slots, according to the company’s chief executive Johan Lundgren.
“This capital increase will allow us to build on our fundamental operational strengths and network strategy for our customers as well as accelerate long-term value creation for our shareholders,” he said.
Under the fully underwritten rights issue, shareholders will be able to buy 31 new shares for every 47 existing shares at a price of 410p each, a 36% discount on the theoretical ex-rights price of 638p a share at yesterday’s closing price, The Times reported.
The EasyJet share price is down by 9.28% during the morning session on Thursday.
