easyJet launches £1.2bn share sale after rejecting takeover offer

An easyJet plane takes off

Budget airline easyJet (LSE: EZJ) plans to raise £1.2bn by selling new shares in a rights issue. Management says the fundraising will strengthen the group’s finances and provide the flexibility needed to take advantage of growth opportunities after the pandemic.

The company also revealed that it recently received a “preliminary takeover approach”. According to easyJet, the “highly conditional” offer fundamentally undervalued the company and was unanimously rejected by the board. The potential bidder is no longer considering an offer for easyJet.

easyJet’s share price fell by 10% in the opening half hour of trading this morning, after the rights issue was announced. The stock is now just 23% above the level seen one year ago, despite a return to regular flying.

One concern for investors may be that easyJet is still only operating at around 60% of 2019 capacity. Flying levels are not expected to increase significantly during the remainder of 2021.

Deep discount for new easyJet shares 

Extra borrowing to survive the pandemic saw easyJet’s net debt reach £2bn at the end of June. The company says the rights issue will reduce this to pre-pandemic levels of under £1bn.

easyJet shareholders will be entitled to buy 31 new shares for every 47 shares they own. The new shares will be sold at 410p. That’s a hefty 48% discount to Wednesday’s closing price of 789p.

This gives the stock an ex-rights price of 638p. This is the theoretical price the shares will trade at when the new shares are admitted to trading later in September.

The record date for entitlement to new shares was 8 September. So, anyone buying the shares from today onwards will not be entitled to buy new shares in the rights issue.

The post easyJet launches £1.2bn share sale after rejecting takeover offer appeared first on The Motley Fool UK.

Our #1 North American Stock For The ‘New-Age Space Race’

Billionaires like Jeff Bezos, Bill Gates, Elon Musk, and Mark Zuckerberg are already betting big money on the ‘new-age space race’, and for one very good reason…

…because this is an industry that according to Morgan Stanley could be worth $1 TRILLION by 2040.

But the problem is most of their investments are in private companies — meaning they’re largely off-limits for everyday investors.

Fortunately, our team of analysts have identified one little-known company that’s at the cutting-edge of the space industry, and is currently trading at what looks like a VERY reasonable valuation

for now.

That’s why I want to urge you to check out our premium research on this top North American space stock ASAP.

Simply click here to see find out how you can grab your copy today

More reading

Roland Head has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Leave a Reply

Your email address will not be published.