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Easyjet Buyback

Old 5th Jul 2004, 07:22
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Easyjet Buyback

Just announced. Stelios planning to mount buy back bid for Easyjet.

Last edited by Ice Man; 5th Jul 2004 at 07:55.
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Old 5th Jul 2004, 07:26
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"Just announced".......where, when, by whom?
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Old 5th Jul 2004, 07:29
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There was speculation at the weekend, where's the announcement ?
 
Old 5th Jul 2004, 07:45
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It appeared in the Sunday Express financial paper. Stelios in a lengthy story, reportedly stated that he is trying to mount a buy-back of Easy Jet, and is to sell the family interests in their Stelmar shipping interests to raise some additional capital.
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Old 5th Jul 2004, 08:37
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Taken from today's Scotsman:

STELIOS Haji-Ioannou, the flamboyant entrepreneur who retains a 41 per cent shareholding in EasyJet, the listed no-frills airline that he founded, has stoked speculation that he might seek to buy the company back and take it private.

Stelios said in a weekend interview that a return to private ownership remained "an option" and indicated that he would also consider an offer from outside bidders.

"Im mature and grown up enough to realise that if there is a good enough offer, Id consider it," he said.

His remarks follow a slide in the EasyJet share price over the past month since the company warned that profits were being hit harder than expected by competition from rival operators and soaring fuel costs.

The shares are bumping along near 156.75p, down from 380p in the past year and valuing the business at some 625 million, against a peak of nearly 2 billion when Stelios announced he was stepping down as chairman back in April 2002.

Speculation he could be tempted back to the company has been doing the rounds in the City for some time now.

Several analysts - including Chris Avery at JP Morgan and Andrew Lobbenberg at ABN Amro - have argued a case for privatisation in current conditions. An added attraction is that EasyJet remains in a strong cash position with 340m in the bank at the end of March.

Stelios founded EasyJet in 1995 with the aid of a 5m loan from his father.
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Old 5th Jul 2004, 10:32
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it was on one of the national radio station news prog's this morning (can't rem which one) but share price has dropped so much now that "the Man" has decided he wants to take the company private ...... didn't Richard B do that some years ago for the same reason?
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Old 5th Jul 2004, 11:57
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LONDON (Reuters) - Shares in EasyJet have risen on news that founder Stelios Haji-Ioannou is considering taking the company private.

The shares were up 2.6 percent, or four pence, at 160.75p by 9:25 a.m. on Monday, valuing the airline at 627.7 million pounds.

An EasyJet <EZJ.L> spokesman confirmed on Sunday that Haji-Iannou, who set up the airline in 1995, was considering taking the firm private, but said no final decision had been reached.

Media reported earlier that the businessman, alarmed at a steep fall in the airline's share price since 2002, could borrow to fund a 650 million pound takeover. Haji-Iannou's family owns 41 percent of EasyJet.

EasyJet shares plunged last month after the airline said 2004 pre-tax profits could fall under market forecasts due to high fuel costs, a price war with Ireland's Ryanair <RYA.I> and competition with similar no-frills European carriers.

EasyJet shares traded over 500 pence in May 2002.
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Old 5th Jul 2004, 13:51
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Also from the BBC
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Old 5th Jul 2004, 14:44
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Before we start relaying that it's a done deal, the word that Stelios uses is considering.

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"I tell you, we are here on Earth to fart around, and don't let anybody tell you any different." Kurt Vonnegut, Jr.
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Old 5th Jul 2004, 14:54
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Yawn....

You folk are seriously gullible. If Stelios or whatever he is called had said anything and I mean anything to the company about a bid, then the company would have had to make an announcement to the stock exchange.

I don't see one.
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Old 5th Jul 2004, 15:27
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Appeared in the business section of the telegraph today, Stelios is working on a 650 million pound deal to buy back the no-frills airline
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Old 5th Jul 2004, 17:11
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Shares down from 3.80. Hm! A few months after 9/11 they were 5.68. That means they are now about 25% of then. Quite a crash.

If Stelios, or anyone else, buys ej and takes it private, how will that effect the employees' share option scheme where the option buy price is now higher than the free market price?

I heard stories a couple of years ago that, in response to a cry for better wages in some ej companies, the response was "you've got the shares and that's enough." Doesn't look quite so bright now, I bet.
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Old 5th Jul 2004, 18:01
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As someone said, no official announcement by the Stock Exchange but this is the way of people putting out feelers to judge what the response would be.
If Stelios were in a position to raise the finance then its a possible runner. But before you all get carried away the rumoured 650 million bid equates to approx 1.70 a share, so hardly a massive premium on current price.
For those of you with share options at a higher price then I'm afraid its tough luck. All you have is the option (but not the obligation) to buy shares at the strike price on a given date in the future. If the strike price is higher than the current price your option has expired worthless and you just buy shares in the mkt at the current (lower) price.

I'm afraid the City is always rather nervous about airlines - too much 'event' and 'political' risk and this has been compounded in Easyjet's case by the spate of recent profits-warnings. With that in mind, if the company continues to perform poorly (and if Stelios or someone else doesn't take it private) then expect to see increased pressure from the major shareholders (usually pension fund managers etc) for changes, maybe even heads to roll at board level

Note to moderators - this is another example of a topic that could be incorporated in a 'Financial' Forum?
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Old 6th Jul 2004, 07:48
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smallpilot,

Your post may confuse some employees with share options. It is not the case that you have to buy the shares at a 'given date in the future' but at any time up to the maximum of 10 years since the options were issued. Therefore the share price may well recover which would take holders of options out of the current low share price and in to a more respectable value for them to trade.
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Old 6th Jul 2004, 12:14
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Why would anyone want Stelios back? He left because it had grown into a large complex company that he did not have the skills to manage.
Everything he has touched since has turned to Sh*t! I think the share price would fall if he returned. If the city don't want him there is no chance.
 
Old 6th Jul 2004, 12:43
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Flap 5

Re Share Options. This is not normally the case. An employee will be granted share options at a given price which they can then redeem at a certain date in the future. The reason for this clause is that share options are usually granted at a discount to the then current market price so it stops employees from cashing in immediately and moving on to another organisation where the same thing may happen. This is why there are so many examples (not just easy) of share options being in negative positions.

Dewdrop

Not strictly true. Stelios left because the City wanted to see a businessman at the helm rather than a serial entrepreneur. With regards to the share price falling if he returned-the question is what share price if he takes it private?
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Old 6th Jul 2004, 13:16
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Stelios still controls only 41% of eJ shares. The remaining 59% he does not control.

The company shares are trading at a bargain price for anyone who has the money at the moment.

Sarge? No....Rosemary the telephone operator? No...Ryanair, the only airline with the money in the bank to buy them? Could be!!!

(Cue Hong Kong Phooey music)

This is the consolidation of which much has been spoken recently. All those people who thought they'd be whipping the big boys' asses...and all they do is end up fighting amongst themselves and then consolidating....

Outing other posters on PPRuNE is frowned upon, particularly moderators. Don't even think about it. Squid.
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Old 6th Jul 2004, 13:43
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Maybe it's a ploy by Stelios to stop the rot in the heavy share price decline by suggesting he's interested in buying the 59% of shares he doesn't already own. He's seen what happened to Marks and Spencer shares recently. Maybe he's really hoping for a higher share price so he can reduce his holding from the current 41%. Meanwhile the market is not convinced, down 1.9% today to 155. Have a look at www.bigcharts.com and enter uk:ezj for the latest.
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Old 6th Jul 2004, 16:14
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Brings up some scenarios

We might see the good riddance of RW - whoopee - a long awaitied event - maybe Barbara would come back then!

OR

heaven forbid - MOL gets his dirty arrogant hands on EZY - I think I will retire now
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Old 6th Jul 2004, 20:07
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some thoughts...

No Chance of Ryanair buying Ezj - they have enough problems of their own and started the whole 'profit-warning' ball rolling earlier this year.

41% is a massive stake-holding in city terms. Under City rules if anyone buys more than 30% of the shares in a firm then they must declare their intentions. Thats why Mr Glazer owns 29.9% of Man Utd - he doesnt want to go over the 30% until he is sure he will launch a bid. You cant change your mind for 6 months.

If Stelios is to be serious about buying Ezj back then he probably needs to talk to around a dozen of the large fund managers who will prob own 2-3% each of the shares. if they want to sell then the rest will soon fall into line.

Why sell at 170p? simple- Its going to be a very long time before we see anything like the heady heights of 300p + for the stock, after all this is a firm that has issued 2 profit warnings in the past few months, and thats ahead of the key summer season. To take 170p now may be a lot better than what might be on offer in a few months.
As I said before the airline sector is out of favour just now - fuel costs, competition, threat of terrorism etc and the city is worried that Ezj's expansion plans are way too ambitious.

Sorry folks but this is not a stock I would want to hold for anything other than a very short-term bounce, but bail out if it doesnt happen. For those who are already long you could sell some above-the-money calls in order to raise a bit of cash, or think about an exit stratetgy if things get worse...
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