EasyJet lands Go in £374m deal

BUDGET airline easyJet said today it is paying £374m to buy Go but admitted it is a defensive measure to stave off a concerted attack from British Airways and Europe's other national flag carriers.

The deal sees Go's venture-capital backer 3i nearly triple its £58m investment after last year's £110m buyout from BA, and a £55m windfall for Go management and staff - including £10m for chief executive Barbara Cassani. Relief over the price being paid sent easyJet shares soaring 9%, up 42p at 502p.

The price, which includes £116m of net cash in Go, is being funded by a four-for-11 easyJet rights issue at 265p a share to raise £276m, after £16m of expenses going mainly to lead adviser CSFB.

But in full documentation to the Stock Exchange, easyJet says: 'In order to be successful, the enlarged group will have to not only compete with other low-cost carriers but also the national flag carriers British Airways, Lufthansa, Air France, KLM, Iberia and Alitalia.'

EasyJet said buying Go meant it could bulk up in a single step when organic growth in an ever-competitive market would have taken far longer.

The deal values Go at 26 times last year's earnings, the same rating as easyJet is valued at by the market on earnings forecasts for the current