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Easyjet shares slump as investor offloads.

Byline: BY TONY McDONOUGH Deputy Business Editor

ICELANDIC investor FL Group yesterday sold its 16.9% stake in Easyjet for pounds 100m ending speculation it was planning a takeover of the airline.

Shares in the budget carrier nose-dived by more than 9% yesterday morning, following the announcement.

FL Group first invested in Easyjet, which operates 18 routes out of Liverpool John Lennon Airport, nearly two years ago and fuelled interest in its intentions by upping its stake on several occasions.

It said it was working on several "interesting investment projects" and the sale of the Easyjet stake would free up funds.

Speculation increased in January when the low-cost operator hired investment bank Goldman Sachs as an adviser, a move seen as an indication it was getting ready to fight off a bid. FL was widely tipped as a potential bidder for the company because it owns Icelandic flag carrier Icelandair and has a 10% stake in Finnish airline Finnair.

In October, it bought Nordic carrier Sterling for pounds 136.7m in a deal that brought 30 aircraft and a network of 46 destinations serving 5.2m passengers each year.

FL denied that the sale of its stake in Easyjet was due to problems in the Icelandic economy, which have led to higher interest rates and the devaluation of the Icelandic krona.

These problems led to two of Iceland's biggest banks having their credit ratings cut by agency Moody's yesterday.

FL said many of the recent comments on the Icelandic economy did not fully take into account "the strong assets that have been acquired by Icelanders abroad".

One of its biggest investors is Baugur, the retail group that owns large sections of the UK high street including Karen Millen and Whistles.

In a statement, the company said: "FL Group's own financial position remains very strong."

Analysts believed a takeover of Easyjet would be difficult to accomplish as around 40% of the airline is owned by the family of founder and former chairman Stelios Haji-Ioannou.

EasyJet holds the number-two spot in the sector for low-cost air travel behind Ryanair.

FL was widely tipped as a potential bidder

tonymcdonough@dailypost. co. uk
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Copyright 2006 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Business
Publication:Daily Post (Liverpool, England)
Date:Apr 6, 2006
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