EasyJet has taken the unusual step of opening its books to Castlelake, the US investment firm that has made four failed takeover attempts, after rejecting a £4.93bn offer it described as “substantially undervaluing” the company.
The Luton-based low-cost carrier said it would grant Castlelake access to “limited commercial information” in the hope that further scrutiny could produce a better offer. The decision marks a slight thaw after months of bitter exchanges, in which EasyJet branded earlier bids “opportunistic” and questioned the “deliverability” of any deal.
“EasyJet rejects £4.93bn Castlelake bid but opens talks, hoping for a higher offer by 5 July.”
“The board believes that giving Castlelake access to limited commercial information might produce a more attractive proposal that better reflects the value of easyJet and its prospects,” the airline said in a statement on Thursday.
The latest proposal, at 650p a share, was the fourth from Castlelake, up from an initial 403p on 1 June. Previous offers of 560p, 600p and 625p were all rejected. The airline said the board continued to be “concerned about the ownership structure and deliverability of any offer from Castlelake, and the time it will take.”
Castlelake has until 17:00 BST on 5 July to make a firm offer or walk away, a nine-day extension from the original 26 June deadline. The Minneapolis-based firm, which has $38bn (£28bn) in assets under management and already owns a small stake in EasyJet, said it welcomed the “constructive engagement”.
The takeover interest emerged as EasyJet’s share price fell by about 30% over the past year, driven down by concerns about the consequences of the Iran war, the airline said. Shares rose 6% on Thursday to 573p.
To maintain an EU operating licence, European carriers must be majority EU-owned and controlled. Castlelake has structured its bid accordingly: under the deal, EasyJet would be 49% owned by Castlelake and co-investors including New York-based Brookfield Asset Management, and 51% owned by individual EU investors.
The US firm has also added two Irish aviation executives to the bidding vehicle: Peter Bellew, a former chief executive of Malaysia Airlines and former chief operating officer at EasyJet, Riyadh Air and Ryanair; and Mark Breen, chief executive of Dublin-based Oneiros Aerospace.
EasyJet’s board unanimously rejected the latest proposal, saying it remained “concerned” about Castlelake’s ownership structure and ability to deliver any offer, and required “satisfactory assurances and commitments”. A spokesperson said the airline was giving Castlelake a firm deadline: improve the offer or walk away.