British airline easyJet to raise $1.7 billion, rejected bid offer

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British airline easyJet said on Thursday it would raise 1.2 billion pounds ($1.7 billion) in a fully underwritten rights issue to fund its pandemic recovery, and added it had recently rejected a takeover offer.

The company said it had rejected an all-share takeover approach which it believed fundamentally undervalued the company. It said the potential bidder had since stated that it was no longer interested in a deal.

EasyJet said that the rights issue presented the company with a strategic opportunity because it planned to use the new funds not just to strengthen its balance sheet, but to take advantage of growth opportunities that arise from the expected recovery in Europe's aviation market over the coming years.

It wants to steal market share from legacy carriers like British Airways-owner IAG, once a rumoured suitor of easyJet, and Air France-KLM as they restructure their short-haul operations.

Under the rights issue, shareholders will be able to buy 31 new shares for every 47 existing shares at a price of 410 pence each, a 35.8% discount on the theoretical ex-rights price of 638 pence per share on Sept. 8, easyJet said.

The rights issue is underwritten by BNP Paribas, Credit Suisse, Goldman Sachs, Santander and Societe Generale.

It also announced a new committed $400 million secured revolving credit facility.