EasyJet shares jumped nearly 10% on Monday after the low-cost carrier agreed in principle to a £5.2bn takeover by US investment firm Castlelake – its fifth attempt to buy the airline.
The Luton-based airline had rejected four previous offers, accusing Castlelake of trying to buy it “on the cheap”. The latest bid, worth £6.90 per share, won the backing of EasyJet’s board, which said it would be “minded to recommend” it to shareholders if a firm offer is made.
“EasyJet agrees £5.2bn takeover by US firm Castlelake after rejecting four earlier bids”
Castlelake, which already owns a 2.14% stake via its funds, now faces a series of hurdles. European Union rules require EasyJet to be majority-owned by EU citizens, so the US firm has proposed a partnership with two EU nationals: Peter Bellew, a former EasyJet chief operating officer who also held the same role at Ryanair, and Mark Breen, an aerospace consultant with senior airline roles in the Middle East. They would control an EU-based company that would hold a majority stake.
EasyJet employs more than 19,000 people and flies around 1,200 routes across 35 European countries. Former aviation executive John Strickland said the airline had “high brand recognition”, a fleet of over 350 planes, and “a very strong slot position at a number of large, congested airports around Europe, including Gatwick and Paris Charles de Gaulle”. Strickland said he did not expect Castlelake to slim down the airline.
City analysts warned the deal underscores how cheaply UK companies are being snapped up. Kathleen Brooks, research director at XTB, said “an iconic British aviation name” would fall into US hands, calling the deal “symbolic” of a “massive for sale sign above UK corporates”. Garry White, chief investment commentator at Charles Stanley, said: “It is clear UK companies are currently being sold off on the cheap.”
EasyJet’s founder, Stelios Haji-Ioannou, who still owns about 15% of the airline with his family, has yet to comment publicly on the bid.
Castlelake has until 17:00 BST on 3 August to announce a firm intention to make an offer or walk away. If it proceeds, the deal will require a shareholder vote. The airline said Castlelake had “emphasised its tremendous respect for easyJet and its people” and would support its fleet modernisation programme, regarded as “central to the company’s long-term competitiveness”.
Whether the offer will pass regulatory scrutiny and satisfy shareholders remains to be seen – but for now, Europe’s low-cost skies may soon have a distinctly American owner.