British companies seriously undervalued and foreign buyers are taking advantage, says
Easyjet’s shareholders must be as pleased as punch, especially Sir Stelios HajiIoannou, who founded the budget airline more than 30 years ago and who still owns a 15 per cent stake.
He and fellow shareholders are sitting on the most fabulous uptick in their shares following the surprise rival takeover bid from giant US private equity firm Apollo gatecrashing an earlier one from Castlelake.
EasyJet’s shares have already soared into outer space since Castlelake first declared interest at the end of May.
Apollo’s offer of £7.15 a share is a healthy 22 per cent premium to easyJet’s closing share price on Thursday, and a whopping 81 per cent increase on £3.94.
That’s the price at which shares stood on May 28, the last day of trading before Castlelake showed its hand.
The $64million question now is whether easyJet has further to fly in the event of a bidding war.
Quids in: The founder of Eastjet must be pleased as punch
Castlelake, whose last offer was 690p a share, has until next month to come back with a higher offer.
Sensibly, the board is clearly hedging its bets over whether the US alternative investment firm will return, as it says it is ‘inclined’ to recommend the Apollo bid.
EasyJet’s shares are still trading below Apollo’s offer, indicating market unease over whether the takeover would clear the EU’s rules (which still apply despite Brexit) that require European airlines to have a majority European owner.
While easyJet’s investors will be delighted by the uplift in value, the shares are only back to where they were trading five years ago.
Like so many airlines, easyJet suffered badly during the pandemic and has more recently been hit by rising fuel prices due to the conflict in the Middle East.
Despite such hiccups, easyJet is one of Europe’s most successful airlines, with slots at all top airports and expanding into the more lucrative holiday package market.
So it’s a highly attractive, profitable asset. Unfortunately, it’s taken smart US asset managers to sniff out its value.
You can’t blame them for pouncing. But you can blame the UK’s financial markets for not appreciating the airline’s worth.
If you needed proof that British companies are seriously undervalued, this is yet another example in a long list.
The solution, however, is not more government tinkering or, indeed, the absurd proposal that UK funds should be mandated to buy British companies.
It is much simpler: put rockets under the London Stock Exchange to boost competitiveness, slash red tape, abolish stamp duty, improve liquidity and introduce new incentives for retail investors. Now.
Back to Voda
French telecoms billionaire Xavier Niel has returned to Vodafone with a vengeance.
Niel sold a small stake some years ago out of frustration with the previous regime.
Now the Iliad tycoon is back as its biggest investor with a 16.2 per cent stake.
Niel likes the clean-up operation conducted by Vodafone’s chief executive, Margherita Della Valle, and promises to be a long-term investor.
So forget a bid, for now. But Niel’s move has already lifted the shares, with analysts placing a 135p target price.
Funny how once again it takes a foreigner to spot an undervalued British jewel.
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