Finance Friday: EasyJet Gets a Better Offer Than the Rest of Us

Hey you,

This week, EasyJet found itself in a £5.7bn bidding war, SK Hynix completed the largest US stock market listing by a foreign company, and SpaceX fell below its IPO price after just 1 month.

US inflation also dropped sharply, although the reason might make the good news short-lived, and frozen tax thresholds are pulling more pensioners into paying income tax.

Let’s get into it.

EasyJet has backed a £5.7bn takeover proposal from Apollo, just days after accepting the terms of a £5.2bn proposal from Castlelake.

Apollo is offering £7.15 per share compared with Castlelake’s £6.90, and EasyJet shares jumped around 15% following the news. Apollo has until 7 August to make a firm offer.

This is good news for EasyJet shareholders, but a takeover by private equity does not automatically mean good news for passengers or employees. Apollo will need to generate a return on the £5.7bn it is spending, which could mean growing the airline, cutting costs or eventually selling it again at a higher price.

It is also another example of an international buyer looking at a British company and deciding it appears cheap. Shareholders may get a nice payday now, but the UK stock market loses another well-known company if the deal goes ahead.

South Korean chipmaker SK Hynix raised $26.5bn through its Nasdaq listing, the largest US listing by a foreign company. Its shares closed around 13% higher on their first day and the company is now valued at more than $1tn.

SK Hynix makes the high-performance memory chips used in AI systems and is a major supplier to Nvidia. It is benefiting from the huge amounts of money companies are spending on AI infrastructure.

SpaceX has had a rather different month. Its shares fell below their $135 IPO price and are now down around 41% from their post-listing peak.

Neither movement tells us whether these are good or bad companies. It does remind us that the price you pay for an investment matters. A business can have exciting technology and enormous potential, but if its share price already assumes years of perfect growth, investors can still lose money.

Some of the world’s biggest companies, including JPMorgan, Goldman Sachs, Netflix and TSMC, are reporting their latest results this week. Investors will be looking for evidence that all this spending on AI is producing real revenue and profit.

US inflation fell from 4.2% to 3.5% in June, while prices dropped by 0.4% over the month. That was the biggest monthly fall since April 2020.

The main reason was a 9.7% drop in petrol prices. This gave households some welcome relief, but oil prices are already rising again as tensions with Iran continue, we just need Trump to calm down for a hot minute.

It is also worth remembering that lower inflation does not mean prices have returned to where they were. It simply means prices are rising more slowly. One good month may reduce pressure on the US central bank to raise interest rates, but it is unlikely to make borrowing dramatically cheaper overnight.

The full new State Pension is expected to reach around £13,012 in 2027, while the tax-free personal allowance remains frozen at £12,570.

This means someone receiving the full new State Pension could owe income tax even if they have no private pension or earnings.

This is fiscal drag. Rather than increasing tax rates, the government freezes the thresholds and allows rising wages and pensions to pull more people into paying tax. Your income increases on paper, but part of that increase goes straight back to the Treasury.

📈 The UK economy grew by 0.1% in May after shrinking in April. Growth over the three months to May was 0.7%, so the wider picture is slightly better than one month’s figure suggests.

🇺🇸 US tariffs produced some very unusual maths. The government refunded $49.1bn to businesses in June after the Supreme Court struck down many of Trump’s tariffs, while collecting just $23.6bn in tariff revenue during the month.

🎬 Paramount and Warner Bros. are facing a lawsuit from 12 US states attempting to block their roughly $110bn merger. The states argue that the combined business would have too much control over the entertainment market, potentially reducing choice and increasing prices.

🚗 Volkswagen is considering cutting up to 100,000 jobs after its annual operating profit fell from €22.6bn to €8.9bn.

💧 South East Water has been ordered to spend £30.5m improving its services after hundreds of thousands of customers experienced supply failures.

🚜 177 English farms were put up for sale during the first half of the year—the highest six-month total since 2007.

🚴 Uber has agreed a roughly €13bn takeover of Delivery Hero. The combined business would operate across 99 markets, although operations in 14 overlapping markets will be sold to reduce competition concerns.

🍺 James Watt wants to buy BrewDog back and says he would return shares to around 20,000 former investors for free.

Finally, Andy Burnham becomes Prime Minister on Monday, which means attention is turning to who will become the next Chancellor. Whoever gets the job will have a huge influence over our taxes, pensions and public spending, while inheriting high government debt and very little room to make expensive promises.

Personally, I think the main theme this week is that companies are becoming bigger and markets are becoming more concentrated. Takeovers can make businesses more efficient, but they can also reduce competition, cut jobs and give consumers fewer alternatives.

Whenever a major merger is announced, it is worth looking beyond the enormous headline number and asking what it could eventually mean for prices, employees and customers.

Have a wonderful weekend.

Abi x