Even the Guardian is at it too.. European short-haul market is consolidating, the next takeover appr26 Sep 2021 18:53
Seems to be when not if.... no wonder the price is rising.
EasyJet needs investors on board as next takeover bid may be serious
Nils Pratley
Wizz Air’s offer was rejected, of course, but £1.2bn rights issue hardly put fizz back into shares
Thu 9 Sep 2021 20.01 BST
The pandemic has transformed the airline industry in unexpected ways: Wizz Air, whose shares have recovered all the altitude lost in the early months of lockdown, is now bigger in stock market terms than easyJet. The latter’s shares are stuck at half their old level and £3.25bn valuation now compares with £5bn for Wizz.
The position is quite a comedown for easyJet, and Wizz’s cheeky takeover bid, one suspects, will have come as a blow to the corporate ego. It had to be rejected, of course, because it would have been an act of desperation to contemplate an all-share deal on “low premium” terms at today’s valuation. Life is tough for easyJet, a UK-skewed operator more exposed than most to UK travel restrictions and the absurd price of PRC tests, but this is not a moment to give up.
But, if not Wizz, where’s the fizz supposed to come from? Chief executive Johan Lundgren’s answer was a thumping £1.2bn rights issue and, in effect, a call for shareholders to be patient, which won’t set many pulses racing.
In its own terms, the fundraising makes sense. The fresh funds will repair a balance sheet where net debt has risen from £326m to £2bn during the pandemic. The company can now cope with a cold travel winter and a slow 2022. And there’ll be a few quid to try to grab prime landing slots at airports such as Gatwick, Paris Orly and Amsterdam Schiphol.
In theory, there’s no reason why easyJet can’t ultimately reclaim its former position and, possibly, emerge bigger from the crisis. But the first task for Stephen Hester, who arrives as chairman at the end of the year, is clear: ensure that the shareholders genuinely support a reinvigoration plan that may take a while. If the European short-haul market is consolidating, the next takeover approach may be serious.
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