By Joanna Plucinska, Julia Payne and Alessandro Parodi
FARNBOROUGH, England, July 22 (Reuters) - The European Union is preparing a review of airline ownership rules to prevent foreign investors from gaining effective control of carriers, an EU official said, a move that could complicate U.S. bids for low-cost airline easyJet.
The EU review, previously unreported, would "protect strategic autonomy" to ensure control of regional carriers remains within the bloc, the official said. It comes amid a bidding
war between two U.S. investment firms for the control of major European budget airline easyJet, which is likely to test the limits of EU rules that demand 51% local ownership.
"This is to ensure that foreign investors don't have full control," the official told Reuters, asking not to be named due to the sensitivity of the matter. "We need to make sure we have sufficient headroom when it comes to control."
EasyJet earlier this month backed a £5.7 billion ($7.65 billion) offer by Apollo Global Management, which trumped an earlier £5.5 billion bid by Castlelake, but did not explain how it plans to meet EU majority ownership requirements, a key hurdle for any non-EU acquisition of a European airline.
If the deal went through, it could set an important precedent for European airlines, opening the door to private equity buyouts in a closely regulated industry where takeovers usually involve another carrier, often with government backing.
The official said that the review, likely in the autumn, would look to clarify which kinds of corporate structures were allowed, especially around control and ownership.
The official said Apollo, Castlelake and easyJet had not spoken to the European regulators about the details of their proposed deals.
EasyJet and Apollo declined to comment. Castlelake did not immediately respond to a request for comment.
"The concern is that the industry is on the wrong foot, thinking that we no longer enforce the rules strictly. People will go down the wrong alley because there's a wrong perception," the official added.
(Reporting by Joanna Plucinska in Farnborough, Julia Payne in Brussels, Alessandro Parodi in Gdansk; Editing by Adam Jourdan, Joe Brock and Sharon Singleton)
