(Bloomberg) -- EasyJet Plc rejected an unsolicited takeover approach from Wizz Air Holdings Plc, according to people familiar with the plan, as the Hungarian discount rival sought to take advantage of a recovery in the short-haul aviation industry.

The preliminary offer was conditional, all-stock and had a low premium, EasyJet said Thursday in a statement without identifying the bidder. It was rejected unanimously by the board and has been withdrawn, the U.K. airline said.

Shares of EasyJet fell as much as 14%, as the company said it will instead raise $2 billion in stock and debt. The money will provide a buffer for EasyJet to get through the slow winter season and position it for a tentative return to leisure travel. 

Representatives for Wizz Air and EasyJet declined to comment on the offer. 

Independent Path

The decision to go it alone marks a gamble for EasyJet and its leadership, which has come under fire for its management of the coronavirus crisis from top shareholder and founder Stelios Haji-Ioannou. European airlines are ripe for consolidation, with fresh outbreaks continuing to impede a return to travel, and forcing carriers to raise more funding to stay afloat. 

“EasyJet’s network and customer reach combined with Wizz’s low-cost management style would be a winning combination,” Bernstein analyst Daniel Roeska said in a note Thursday. “It would definitely be a major shake-up of the European space.”

While potentially beneficial for profits, a takeover “would probably be met with significant cultural reservations on the target’s side,” Roeska said.

EasyJet shares dropped 11% to 701.20 pence as of 10:10 a.m. in London. The company said Thursday it will pursue a rights offering of 1.2 billion pounds ($1.65 billion) and raise $400 million in debt.

Wizz’s London-listed shares of Wizz slid 4% to 4,778 pence.

Travel Rebound

Short-haul travel in Europe has partly rebounded during summer, but the comeback has been spotty. Luton-based EasyJet has been held back by changing U.K. travel rules. Budapest-based Wizz, meanwhile, is back above 100% of its pre-pandemic capacity, and Ryanair Holdings Plc, the Dublin-based low-cost giant, plans to expand over the winter. 

Wizz, run by Chief Executive Officer Jozsef Varadi, is part of the constellation of low-cost airlines that count Bill Franke as their top investor. He chairs Wizz as well as Denver-based Frontier Group Holdings Inc., which went public earlier this year. 

The company’s roots in Eastern Europe have given Wizz a lower cost base than even Ryanair. That edge has helped Wizz expand west, establishing bases in Austria, Italy and the U.K., where a bid to expand at EasyJet’s main Gatwick hub has been held back by a lack of access to operating slots.

Wizz Air Takes Battle to Ryanair With August Traffic Surge

(Updates with analyst comment in sixth paragraph)

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