EasyJet Acquisition of Go confirmed

[Desk Driver]

Done Deal for £374m.

What could happen now?

[Red Snake]

From the BBC...


Easyjet agrees deal to buy Go


The low-cost airline, Easyjet, has announced that it's buying its rival Go for £374m.
The chairman of Easyjet, Stelios Haji-Ioannou, said: "This is one of the most exciting developments in Easyjet's history.

The airline announced earlier this month that it was in talks with its rival about a possible takeover.

The chief executive of Go, Barbara Cassani, had made it clear she was not happy with the proposed deal.

But in a statement she said the acquisition was a tremendous compliment to everyone at Go.

More soon

[Desk Driver]

London, May 16 (Bloomberg) -- EasyJet Plc said it agreed to buy Go Fly Ltd., Europe's No. 3 no-frills carrier, to add routes, aircraft and passengers and overtake Ryanair Holdings Plc as Europe's biggest low-fare airline.

Luton, England-based EasyJet said it will buy Go for 375 million pounds ($547 million). Analysts had expected it to pay between $585 million and $878 million for the closely held carrier, which is controlled by 3i Group Plc venture-capital investment company.

The takeover "offers the potential to create substantial value for our shareholders,'' Chairman Stelios Haji-Ioannou said in a statement released on Regulatory News Service.

EasyJet has been growing by adding routes at airports such as London Gatwick and winning budget-conscious travelers from full- service rivals such as British Airways Plc. It also has a one-year option to buy British Airways' unprofitable Deutsche BA unit for at least 44 million euros ($40 million).

EasyJet also said today it will raise 276.7 million pounds in a share sale to current investors.

The carrier's shares fell as much as 30 pence, or 6.5 percent, to 430p.

Go Fly's profit from operations more than quadrupled to 17 million pounds in the year ended March 31 while sales rose 46 percent to 233.7 million pounds. Go Fly's passenger count in the fiscal year ended March 31 rose 55 percent to 4.27 million. That compares with EasyJet's passenger count of 7.1 million in the year ended Sept. 30.

Go has net cash of 116.4 million pounds, EasyJet said today.

[Hudson Bay]

£374 million for a fleet of tatty aircraft and a couple of porta cabins! Sounds like a massive sum of money. British Airways will do well out of it though.

[Engee73]

BA wont profit, it doosn't own any of GO anymore.


From the FT

EasyJet reaches agreement to buy Go for £374m
By Kevin Done, Aerospace Correspondent
Published: May 16 2002 09:11 | Last Updated: May 16 2002 09:25



EasyJet has entered into a conditional agreement to take over Go, its smaller rival, in a deal that will create Europe’s largest low-cost airline.

It is paying £374m ($546.4m) to take over the entire share capital of Go and certain loans and obligations.

It is planning to finance the deal partly through a £276.7m four for 11 rights issue at a deeply discounted price of 265p per share compared with Wednesday night’s closing price of 460p.

EasyJet said a further £113.3m would be financed from the enlarged group’s cash resources.

The group said that the deal gave Go an enterprise value of £257.6m after taking account of £116.4m of net cash on the Go balance sheet at the end of March.

The sale of Go is likely to create around 20 overnight millionaires from the group of Go senior executives and managers, who participated in the £110m management buy-out from British Airways in June last year.

As part of the sale last year 22.5 per cent of the Go equity was earmarked for ownership by current and future employees.

The sale is a financial coup for 3i, the UK venture capital group, which with allied funds has controlled a 67.5 per cent stake in Go and supported the management buy-out less than a year ago. Barclays Private Equity held the remaining 10 per cent.

The biggest personal financial winner in the deal is Barbara Cassani, Go’s American chief executive who holds a four per cent stake in the airline.

Ms Cassani has consistently opposed the sale since 3i began disposal talks with EasyJet in February, however, claiming that the future of Go "would be best served" by an initial public offering that would have allowed it to maintain its independence rather than it being taken over in a trade sale to its arch rival.

Ray Webster, chief executive of EasyJet, will remain as CEO of the enlarged group, and Ms Cassani has already stated that she does not want to be part of the combined business "in any capacity". She said last week that it was her intention to leave the business on completion of the negotiations.

The Go brand will eventually disappear as the two airlines are merged.

The takeover will mean that EasyJet will have a significant presence at three London airports, Luton, Gatwick and now Stansted, where it will move into head-to-head competition with Ryanair, hitherto the clear leader of the no frills sector.

EasyJet and Go are relative newcomers to the European aviation industry. EasyJet began flying in 1995 and Go in 1998, but both are already posing a growing competitive challenge to the traditional European flag carriers.

Go, which is headquartered at Stansted and also has UK bases at Bristol and East Midlands airports, carried 4.27m passengers in the 12 months to the end of March, a rise of 55 per cent. It is operating on 39 routes to 24 airports with a fleet of 25 Boeing 737-300s.

EasyJet carried 8.25m passengers in the 12 months to the end of March behind the 11.09m of Ryanair. It is serving 45 routes from 19 airports this summer with bases at Luton, Liverpool and Gatwick in the UK and at Amsterdam and Geneva in continental Europe. It had a fleet of 30 aircraft at the end of March, which is expected to grow to 36 by the end of September.

The takeover of Go is only the first step in EasyJet’s planned growth through acquisition. Last week it said that it was also taking an option to acquire Deutsche BA, the loss-making German domestic airline from British Airways by July next year.

Concerns have already been expressed by financial analysts that EasyJet would be seriously overstretching its management resources by taking over both airlines.

[sky9]

Just a thought £250m net for an airline without any route rights and old 737's on Operating leases (like renting a car from Hertz: or in this case the local second hand car lot)?

The only assets must be the staff so now you know how much the city thinks you are worth. When are we going to wake up to our real value.

Go without its pilots is worth nothing.

[Psr777]

Engee73: There was a clause written into the deal between BA and 3i, that means if they sell GO within 10 years (i think!), then BA will receive a share of the resale value. I understand they will receive about £20 million.:eek: :eek:

[corsaman]

That ought to improve the cheeseboards...........

[private_s_baldrick]

Hudson Bay: £374 million for a fleet of tatty aircraft and a couple of porta cabins! Sounds like a massive sum of money.


And just how tatty are your (Jersey European/BEA/FlyBE - whatever) BAe146's these days?

Half your companies aircraft can't agree on a livery. Your website is up and down like a whores draws. Your miniscule marketing budget runs cinema adds for routes you dropped months ago.

You lost £10m last year and if you do the same this year you face closure. You have no answer to the low cost invasion. Don't be bitter. I am sure easyJet will have place for you in a nice new Boeing NG. Much more civilized than bouncing about in a Dash8, cramming yourseld into a CRJ or dragging around in a 146...

Go is worth £374m because thats what it cost in the market this morning. How much is BEA worth I wonder..?!?

[A.J.Baker]

Well, at least now we will see if EasyJet's 75 plane Airbus order and GO's 75 plane Airbus order are actually one and the same order.

[flybyvelcro]

The most interesting question of all is how happy are thew Easy Captains going to feel when they hear that the Go Captains will be getting approximately £67.000 for an out lay of £485.00!
This is the value of their share options, and Barbara has announced that each 10p share will now be worth £14.00. I can see a lot of unhappy Easy people.

[orange pilot]

Fantastic news, hope it puts an end to all the bickering and lets all get on with thrashing the rest of europe. To all the GO staff, just seen on EJ website plans for Take over parties, EJ parties or V.good.

Hope we get Airbus, still the 700 is nice!

[Desk Driver]

sky9

It's amazing the things that the city will put a value on. Yes Go crew are definately an asset but there are other things like taking a competitor out of the market, that alone will be worth a few hundered million, plus the goodwill of passengers & suppliers.

Now I may be synical but I wonder how many Easyjet investors were buying up 3i shares this morning.

[noflare]

:) The deal is done and why should anyone begrudge the GO pilots there money, lets hope all the bull*hit can be put to one side and we can all work together to make something of this new venture !

[Desk Driver]

Not involved with either party but I remember when we were bought out and if all adopt Noflare's attitude they'll be fine. After the worry of the inevitable restructure of course.

Good luck to all involved.

[Desk Driver]

Seems they won't be a need to worry about the restructure

EasyJet PLC chairman Stelios Haji-Ioannou said the £374 million acquisition of Go Fly Ltd has less to do with cost savings and all with creating a carrier with enough critical mass to compete against established full-service airlines.

Combining the two airlines is unlikely to result in any redundancies or cutting back of routes, nor are ticket fares set to go up, he added.

"Fares are likely to remain at the same level as over the past years," Haji-Ioannou said, speaking at the fringe of the press conference following the announcement of the deal.


Full Story (http://www.ananova.com/yournews/story/sm_589320.html)

[In trim]

Welcome on board to all our new colleagues from Go.

Let's hope we can 'integrate' well, and use the best of both companies to create a really powerful force in Europe.

In trim.

[crusin level]

Easyjet+Go=High cost base=end of low fares.

Lets see how well you survive in the marketplace now!

[Wee Weasley Welshman]

Cruisin level - how so a higher cost base? Surely 1 profitable airline + 1 profitable airline = 1 bigger profitable airline? The there would be reduced advertising spend, reduced admin support, bigger discounts on aircraft and contracts etc...

Hello to all in easyJet - don't believe a word they say about the BRS base, its a fractious hell hole of a base with routes from hell run by a tyrant. Honest ;)

WWW

[BTB]

Blimey, WWW! I was hoping to relocate there after the merger! I could of course replace him? I could be a base manager!:D

[BlueUpGood]

Corsaman

FYI the cheeseboard has gone.. we (the pilots via BALPA) gave it away to finance a respectable redundancy package for surplus Flight Engineers who were shafted by the company post 9/11.

If you are intent on maintaining the myth that BA is the land of milk and honey, employing selfish self interested pilots, kindly think again, and get your facts right!!

Regards,

BlueUpGood

(4 years in and still earning less than before I joined and actively seeking employment elsewhere. Believe me, it IS a myth)!

[Wing Commander Fowler]

hehe...... so there IS a God? :D

[FlapsOne]

BTB

You..........base manager..................

Seriousy folks, looking forward to working WITH all guys/gals at GO.


WWW

Spot on old chap.

Cruisin Level

Why a high cost base all of a sudden?

[Mad Max]

Just a quick line to say a really warm hello and welcome to all the GO girls and boys - together we are going to make an unbeatable team! I know I've said a few rude things in the past and I am sure some will remember me from being a wind-up merchant and spin doctor, however the future really is bright for us ALL.

As for share options that GO people have got out of the deal? Well, good on yer! Right place, right time, don't knock it.

You've got brilliant bits of your airline to share with us just like we've got brilliant bits in ours. We hope you like our ............ department?! No only kidding, they're great really honest!

It won't be easy at times, but if we survive as one huge rapidly expanding company then the opposition have cause for concern - there's only way to do shorthaul in Europe now and that's Low Cost. I wouldn't want to be employed by any trad airlines doing shorthaul jet flying just now in the UK - the days of the traditional airline are numbered.

Keep smiling! Yours, Max. :) :) :)

[tinyrice]

1 profitable airline + 1 profitable airline does not necessarily mean one bigger profitable airline. The reason? The advantages of the economies of scale are lost to the in-fighting, politics, and equity comparisons about who gets to stay, who gets to fly where and in what, who gets promoted, whose ideas and systems are retained, and whose discarded. Initially, it will all be hail fellow well met. But, theres generally two of every department, which means that unless explosive growth is in your future - somebody's losing their job as they're consolidated. Then it won't be long before human nature kicks in and somebody realises that somebody from the "other team" is getting a better deal than they are, and then it's on for young and old. If that scenario doesn't affect this merger, then yours will be the first conjoining of airlines in history that worked to everybodys adavantage. Good luck to you all, and whatever you do, please don't take the inevitable testiness flying.

[King Kee]

Tinyrice,

Both airlines are expanding rapidly anyway....around 25% + per annum. There will be no forced redundancies.

Many departments will fit well together, and with an expanding number of bases there will be jobs for all.

Cost base will not increase. Better economies of scale across the board, better negotiating position with suppliers, etc.

As long as the amalgamation is handled right we will really be a formidable force.

Looking forward to the challenge!

[tinyrice]

King Kee..........Bravo! Good luck in your endeavours.

[VIKING9]

So, time for Ms Cassini to start another carrier and call it..................GO-AGAIN ;)

[TDK mk2]

Mad Max, good luck to Easyjet and Go in their joint endevours in the future and I hope I may one day have the privilege to fly with you. But lets be clear that you are not in the business for any other reason than making money and just won't bother with the routes where you won't be able to do that such as those that we fly. So lets have a little less of the fighting talk and realise we can all exist in our niche and provide a broad range of services to the customer. After all they're the ones that keep us employed...

[Localizeralive]

Congratulations easyjet and go

i think Stelios is steering in the right direction with this deal. i know everybody is talking about integration of GO and speculating about the advantages or disadvantages. First of all a big compliment to all the people of GO for their success after the sale to 3i. You folks weren't allowed to make profit during your BA times, i guess and u turned your business in the right way. So use your chances don't be jealous of better contracts, salaries
and whatsever. Stick your heads together and do all the best u can to bring it forward and then.................please use your option to buy Deutsche BA.

You will get a basically excellent airline and a good entry in the german market. We are able to spend a really good contribution to the whole group. And the best is you will get very cheap. ;)

Together we are strong:D

all the best from EDDM

[Nightstop]

Thanks to you easyJet people for your kind words of welcome above. I'm looking forward to working with you, together we'll move this business forward in giant steps for the benefit of our customers, shareholders and of course ourselves. Looking forward to the parties http://www.stopstart.btinternet.co.uk/sm/rock_band.gif

[In trim]

Localizeralive,

I'm sure that will happen and the option to take on DBA will be exercised at some point. Full integration would not really be practical until the Go integration has been managed, but some link-ups between the networks could no doubt start before that.

Look forward to working with you.....I know DBA can be turned into a good profitable operation once it is out of BA's hands, and as long as we get the buy-in of the DBA staff.

All the best,

In trim.

[outofsynch]

yes i would like to say thanks to the 'easy-welcome' too.

Its not 'easy' swallowing the end of a company and name that you feel extremely proud of. But this is business, and the new easyjet will certainly be a force to be reckoned with.

I cant believe the Ryanair supporters club has gone so quiet!

[BTB]

Oy Flaps One. How rude.

[kriskross]

Isn't it nice to see a thread where everyone is so pleasant and positive, for a change. Let me add my welcome to all our Go colleagues, and welcome DBA, hopefully for the future.

Kriskross

[Wee Weasley Welshman]

I am making moves to establish a joint easyJet/Go private forum. Will keep you posted.

WWW

[Broken Wings]

I filled in the easyJet online application two months ago - no feedback at all apart from the "Thank You" screen to say that the application had been sent.

Wrote to Go a few weeks ago and had a reply within 10 days.

I assume that the pilot recruitment section at Go will sadly lose their jobs as the system goes automated. When companies merge the best bits should be used from each. I therefore sincerely hope that easyJet will be a little more polite in responding to applications. A "Thanks but no thanks" email is in my view better than nothing at all.

Good luck to all.

[Few Cloudy]

Shares were at #5.08 this morning...

As an ex easyJet captain and still a big fan let me wish luck to all who sail in her and hope that the enthusiasm will last through the inevitable rough patches during adaptation.

[treadigraph]

Easy come, Easy Go... sorry, couldn't resist! Mind you, some might have preferred Easy Virgin...

Hope it all works out well for everybody, including us, the passengers.

[FlapsOne]

treadigraph

It surely will work out for you passengers - despite MOL's ramblings about our apparently high cost base.

BTB

Sorry mate.......couldn't resist. Guess that takes me off your next sticky bun list!

All GO peeps

We gotta have somne really good parties on the back of this, so, looking forward to some beers as well as flying.

WWW

Great idea but a little early maybe??

[Wee Weasley Welshman]

Flaps One - in addition to the existing company fora.

WWW

[FlapsOne]

www

Fair point!

[Navy_Adversary]

Any idea if EZY will still keep EMA as a base?

[Landing_24R]

Navy,

no idea about the long term, but in the short term Easyjet have said that all bases and routes from Go would be retained, except those where Easy and Go competed

Landing 24R

[Oleo]

WWW - can we at least get the Go forum working again? - I emailed PRuNe Towers with no reply.

Would be especially useful at this time.
Thx.

[no sig]

WWW

Excellent idea for a joint 'merger forum, as it were. I was thinking along a similar vain but with regard to the easyJet Company website which is the news conduit for easyJet staff, however, all in good time.

And if I may, along with the others, welcome everyone at Go. I too am very positive about the merger.

[springbok449]

Yes, welcome to all the GO people, looking forward to meeting and flying with you all, already met a couple of pilots in EDI at weekend, nice people!
Anyway, would not mind moving to EMA.
Safe flying,
Regards,
Bokkie449.

[Hussar 54]

Don´t wish to be too cynical, but....

Read an article over the weekend where easy management were trying to justify the purchase price of approx 200 million more than they maybe could have paid just 12 months ago with something like.....¨ at the time, we were fixed entirely on the easy floatation and didn´t have the time ¨...etc. etc...

So, a question to an answer I read last year but can´t remember - just how much did the the easy manangement team make from their original floatation ?

Now...if I was an easy investor, I would be asking whether it is entirely objective on the part of easy management to spend 200 million more of shareholders´money ( easy is now a public company, right ? ) than they had need to have done had they decided to have acquired GO just 12 months ago and delayed the floatation for, say, a further 12 months.

Perhaps GO did increase in value during this time....but almost 300% in 12 months ???

I´m sure it couldn´t possibly be anything to do with the easy owners making sure that they cashed in their chips first before gambling 200 million of somebodyelse´s money.....or could it ?

[FlapsOne]

Can't recall how much EZ made from the floatation....must be a matter of record somewhere.

But.....if the purchase price was £374m, which included £116m cash in bank, net outlay was £258m. Thus the suggestion that 12 months ago GO was worth £200m LESS - ie circa £58m is, I would suggest, somewhat wide of the mark.

Perhaps the article writer should check his/her facts and have another go.

Maybe the 'quote' about fixation on floatation is also questionable.

[doggonetired]

Seems to me that unless it's just lip service being paid to the sentiment of togetherness, most, who are prospective new colleagues, are determined to make the most of the opportunities to succeed. I wholeheartedly join that wave of optimism and wish all, the best for the future together.
:)

[Hussar 54]

FLAPSONE....


Don´t want to fight / argue, etc....used easy an awful lot between LTN and NCE ( now use BUZZ out of TLN/MRS as it´s more convenient ) but no quibbles and certainly no axe to grind. However...

Don´t know how much the management made - but would suggest that it was probably well deserved, to have come this far in such a short time. Likewise Ms Cassani and her team ( don´t know how to spell it, and apologies if this isn´t correct... ) and if anything, I would suggest that Ms Cassani´s achievement in assembling GO is perhaps equal to that of the master himself but without the same massive rewards ( although 14 million isn´t to be sniffed at ) and maybe this is why she is reported to have been against the deal with her eyes fixed on a IPO herself in the near future....

Anyway, quote attributed to Roy ( is it Ray ? ) Webster....will try to find the magazine source if I haven´t already junked it, but absolutely in print - anyone else see the article in a UK language magazine late last week and can confirm ?

He was also quoted as saying that as GO had very few assets, the price was essentially a ´goodwill ´ acquisition....which, again, seems an awful lot of money and a little strange as the both the GO name, brand and image is about to disappear....

Regarding the numbers - you suggest a ´net ´cost of approx 258 million, which I would suggest is still somewhere between 150 - 200 million more than GO´s price just 12 months ago...OK call me a liar... not ¨approx 200 million more´ as I originally suggested, but merely an approx 150 million more and still a lot of money for ´goodwill ´ for a business which is about to disappear without even managing to achieve even consecutive annual profits....incidentally, where / how did GO manage to accumulate more than 100 million in cash ( as you indicated ) during the 12 months since ´independence´ from BA - isn´t that almost 50% of their annual turnover ? A cash cow if ever there was one....or was that 3i´s original investment and GO has still to generate ´real ´cash from its own efforts ?

I would suggest that the price which easy has reportedly paid BA for an option on Deutsche BA´s ´goodwill ´is a tad more realistic - the price paid for GO appears to resemble some of the stupid ´dot-comedy´ NASDAQ prices of just a couple of years ago
before the bubble burst....

And last, but not least, and just to provoke - could it just be opportunistic purchases ( or should that be purchase, as I´m German and I can tell you that transforming DBA with its unions and high cost base will be no easy exercise ) to give Stelios a need to weave his magic and retain some day-to-day involvement in knocking the two / three businesses together ?

Rumours were that he wasn´t exactly ´over the moon ´about the city´s request for him to take a couple of steps back.....

As I said, no axe to grind and more power to easyJet for having the b**ls to try - but why didn´t they acquire the business for 150 - 200 million less just last year ?

[no sig]

I think it might simply be that last year the timing wasn't right, this year it is.

[nice_beaver]

As i remember it, and i could be wrong, but wasn't Bob or Rod quoted as saying they would not sell to competitors - making the management buyout most likely. I also believe they put a caveat in the deal such that any future sale, within a certain period would mean cash to BA!

[FlapsOne]

Hussar 54

The £258m price plus £116m cash is not my figure. It was widely reported as such in ALL the Financial markets last week following the confirmation of the purchase.

Are you suggesting that, 12 months or so ago, that:

a: You know that 3i was ready to sell GO for circa £60m?

b: Quotes from Ray Webster, Barbara Cassani or anyone else for that matter are necessarily always reported accurately in magazines/newspapers?

I wish I had bought my house 20 years ago when it was valued at a fraction of the cost I paid for it in 1996 - but the time wasn't right for me then.

Maybe the time wasn't right for EZ last year either.

[Hussar 54]

FLAPS...

Apologies for delay....actually been working sectors around N Africa for the past month and had no access.

As for 116 million in cash, as you say, shouldn't always believe what we read in the press but this time I do - and buggar, still can't find the mag for my own previous quotes....but on the back of Takeover laws/disclosures, etc, would have thought not too much would have been dreamed up tabloid fashion....but still left trying to recall from where ?

Anyway....

a: don't know what happens inside 3i or what they planned/wanted 12 months ago - only know they were successful in acquiring GO for, was it, the equivalent of about 115 million....sorry French keyboard and no pounds sign...

b: see above re cash....

As for your house....feel the same myself ! But then again, that wasn't independent Shareholders' money....

Butttttt.....if GO was really, really, really worth approx 350 million, then why not have bought it for the 3i purchase price last year - say 120 million - and then bring easy to market with a valuation significantly higher - around 200 million higher than cost if this new purchase price is closer to the correct worth of GO than the firesale price agreed by BA....

I suppose that all I am trying to say is that either BA sold too cheaply - for whatever reason - and heads should roll....or easy bought too high - for whatever reason - and heads might roll in the future.....

And any more news on the Deutsce BA deal yet - quite a few driver friends there desperate to maintain the status quo......