easyJet said it would raise £1.2bn in a rights issue to strengthen its balance sheet after rejecting a takeover approach reported to be from Wizz Air
The budget airline said the trading environment remained uncertain and that raising funds would protect its long-term position in the European aviation market. A stronger balance sheet will protect against a “downside scenario” of continued travel restrictions and a slower recovery for travel.
easyJet also said it recently received an unsolicited preliminary takeover approach. The board rejected the all-share proposal and the potential bidder is no longer considering an offer, it said. Wizz Air, easyJet’s fast-growing budget rival, made the approach, Bloomberg reported.
easyJet shares fell 11.2% to 700.6p and Wizz shares dropped 3.9% to £47.81 at 08:51 BST. Wizz has a market value of £4.9bn and easyJet is valued at £3.2bn.
easyJet said the proposal “fundamentally undervalued” the company. “In deciding to reject it, the board took into account all relevant factors including the highly conditional nature of the proposal and the certainty and strategic opportunity that the rights issue presented to the company,” the company said.