EasyJet investor plays down bid talk

Takeover speculation responsible for sending easyJet shares to an 18-month high was played down today by the airline boss at the centre of London market interest.

Hannes Smarason, who is chairman of the owner of Icelandic flag carrier Icelandair, denied his company was behind yesterday’s heavy buying of easyJet’s shares, which helped drive the share price up by another 7%.

Amid speculation that his business, FL Group, was about to launch a takeover, Mr Smarason told the Financial Times “there is no statement coming” today.

FL Group has built up a 13.01% stake in easyJet in several stages since October, when shares were at a record low of 120p. The company added to its stake with a the purchase of a further 1.1% holding earlier in the week.

Yesterday, easyJet’s shares rose 20p to 304.5p after more than 10 million shares were traded compared with the normal volume of around 2.5 million.

Rumours swept the market that FL bought more shares yesterday, but Mr Smarason said: “It must be other investors’ interest. Today was not us.”

Despite the comments, easyJet shares continued to rise in early trading today - lifting another 2% or 6.25p to 310.75p, the highest level since March 2004.

It is thought that any takeover bid would be difficult to accomplish as the family of founder and former chairman Stelios Haji-Ioannou owns around 40% and he has said he is reluctant to sell his stake.

He told the FT last night: “I am not a seller at the current levels. I think the stock is undervalued and I am working with the board to enhance shareholder value.”

The company’s articles of association also prevent non-UK investors from holding more than 40% of the shares.

It is thought FL could use a UK venture capital partner to overcome the twin stumbling blocks of its small size and the articles of association.

Icelandair, which is one of 14 subsidiaries of FL Group, operates 13 Boeing jet aircraft and flies to 22 destinations in 10 countries in Europe and North America.