EasyJet’s board has reached an agreement in principle to be taken over by the US investment firm Castlelake in a deal that values the airline at around £5.2bn – ending weeks of brinkmanship after four lower offers were rejected.
The Luton-based carrier, one of Europe’s largest airlines with more than 19,000 employees and 1,200 routes across 35 countries, said on Sunday evening that the proposed offer of £6.90 a share was at a level it “would be minded to recommend” to shareholders should a firm bid materialise.
“EasyJet board agrees in principle to £5.2bn takeover by US firm Castlelake after rejecting four lower offers.”
Castlelake, which manages $36bn (£27.3bn) in assets and owns a 2.14% stake in EasyJet through its funds, had previously made four offers – at £6.50, £5.60, £6 and £6.25 a share – all of which were rejected. EasyJet had accused the firm of trying to buy it “on the cheap”, and noted that its share price had been “temporarily depressed” partly because of the impact of the US-Israel war with Iran on the travel sector. Before news of the first bid emerged in June, EasyJet’s stock had fallen by more than 30% in the past year. The shares closed on Friday at £5.58 each.
The agreement, which follows weeks of negotiations and was announced after the stock market closed, does not confirm a deal. Castlelake now needs to secure regulatory clearances and approvals. One significant hurdle is that EasyJet is a European company, and under EU rules it must be 51% owned by a European entity. Castlelake, a US firm, has previously outlined how it would endeavour to comply with that rule.
Castlelake has until 17:00 BST on 3 August to either announce a firm intention to make an offer or walk away. If an offer is made, it would require approval from EasyJet shareholders in a vote.
In a joint statement, Castlelake said it had “emphasised its tremendous respect for easyJet and its people, along with its intention to support its future growth and transformation to a stronger, more resilient European airline”. It also expressed support for EasyJet’s plans to buy newer planes to modernise its fleet and cut fuel costs.
The takeover would take Britain’s biggest low-cost carrier private and add it to a growing list of blue-chip companies that have unveiled plans to quit the London Stock Exchange since the start of the year. Whether Castlelake can clear the EU ownership hurdle and win over shareholders remains uncertain.