easyJet in another round of acquisition turmoil

easyJet in another round of acquisition turmoil

	Published : Tue, 10 Jan 2006 17:05 By : Andrew Stead Print this Story

LONDON: Britain's highly successful budget airline easyJet Plc. is yet again subject of acquisition rumours. Speculation is rife in the industry circle that the airline is set to be annexed by Iceland's FL Group, which has already built up a 16.2 per cent holding in the company.

easyJet's founder and largest shareholder Stelios Haji-Ioannou has indicated that he is studying the merits of the FL Group offer even as the shares of the company rose to three-year high at 4001/2 pence Tuesday giving it a value of 1.61 billion pounds.

In an e-mailed statement, he said: "I am not any closer to selling to anyone. I still think the stock has more potential. I care who will be the licensee of the easyJet brand. I just haven't done enough work to decide if the FL Group would be OK or not."

However, in a clear enough indication that the company wants to defend itself against a hostile bidder, it has engaged Goldman Sachs as its main financial advisor, replacing Credit Suisse First Boston.

While Haji-Ioannou has a personal stake of 16.6 per cent in the company -- just ahead of the Reykjavik-based GL Group's -- his family as a whole holds nearly 41 per cent.

easyJet had a great 2005. Its passenger numbers crossed 2.3 million and its revenue went up 20.5 per cent over the previous year to 2.26 billion.

FL Group is also appearing to be gearing up for the kill. It is believed to have raised some $728 million through an issue of new shares on the Icelandic stock exchange.

The articles of association of easyJet prevent non-U.K. shareholders from owning more than 45 per cent of the airline while European Union rules stop non-EU investors holding more than 49 per cent of an EU airline. But FL Group has enough shares to requisition an extraordinary meeting to overturn the 45 per cent rule. Iceland, as a member of the European Economic Area, is exempt from the restrictions on non-EU ownership.

FL Group has been describing the holding as a strategic investment. It has a nominee on the company's board -- Jon Asgeir Johannesson, the Baugur founder who has a substantial presence in the British retail market as he controls high street stores like Iceland, Hamleys, Mappin and Webb, Whittards and Karen Millen.

Even if Haji-Ioannou sells his entire stake, he will own the easyJet brand and analysts say he can continue to influence a new owner who takes over as licensee. The licensing agreement was adopted when easyJet floated on the stock market to protect Haji-Ioannou's ownership of the "easy" brand, which is applied to several other ventures.