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EasyJet has agreed to a takeover by Apollo in a £5.7 billion deal, kickstarting a bidding war for the UK airline which days ago accepted a bid from rival US suitor Castlelake.

The Luton-based airline said it had reached an agreement in principle for an offer worth £7.15 per easyJet share.

The offer values easyJet’s fully diluted share capital at about £5.7 billion and would be paid for with a combination of equity and debt.

This makes it a bigger offer than the £6.90-a-share bid from rival US investment firm Castlelake,

That offer had valued easyJet’s shares at £5.23 billion, or £5.5 billion on a fully diluted basis.

EasyJet said Apollo’s offer “delivers a superior outcome” for its shareholders by providing a higher cash value, and the board was therefore “no longer minded to recommend the Castlelake proposal”.

The company also said Apollo places a high value on its staff and believes in the importance of the easyJet brand, which it does not intend to change.

Apollo has until August 7 to make a formal offer for easyJet.