A US investment firm has reached an agreement in principle to buy EasyJet for about £5.2bn, potentially taking one of Britain's best-known airlines private and off the London Stock Exchange.
EasyJet is one of Europe's largest low-cost airlines, flying 1,200 routes across 35 countries. It is based in Luton and employs more than 19,000 people. The company has been listed on the FTSE 250 index of mid-sized firms.
“EasyJet's board agrees in principle to a £5.2bn takeover by US firm Castlelake, explaining the bid, regulatory hurdles, and what it means for UK travellers.”
The potential buyer is Castlelake, a US investment firm that manages $36bn (£27.3bn) in assets. It already owns a 2.14% stake in EasyJet through the funds it manages. Castlelake had made four previous offers, all rejected by EasyJet's board as too low. Those offers were worth £6.50, £5.60, £6 and £6.25 per share. EasyJet accused Castlelake of trying to buy it "on the cheap".
The latest proposal, put forward on 4 July, is worth £6.90 per share. On Sunday, the board and Castlelake announced they had reached an agreement in principle. The board said the financial terms were "at a value that the Board would be minded to recommend" to shareholders, should a firm offer be made.
This does not mean a deal has been confirmed. Castlelake now has until 5pm on 3 August to either announce a firm intention to make an offer or walk away. If a firm offer is made, it will need to be put to a shareholder vote.
One significant regulatory hurdle is that EasyJet is a European company. Under European Union rules, it needs to be 51% owned by a European entity. Castlelake is a US firm, though it has previously outlined how it would try to comply with this rule.
EasyJet's share price has fallen by more than 30% over the past year. The company blamed the drop partly on the impact of the US-Israel war with Iran on the travel sector. Before news of the first bid emerged, EasyJet shares closed at £5.58 each on Friday.
In a joint statement, Castlelake said it had "tremendous respect for easyJet and its people" and intended to support its growth and transformation into a stronger, more resilient European airline. It also backed EasyJet's plans to buy newer planes to modernise its fleet and cut fuel costs.
If the takeover goes through, it would add EasyJet to a growing list of companies leaving the London Stock Exchange for private ownership.
Q: Why does EasyJet need to be majority-owned by a European company? EU regulations require that any airline operating within the European Union must be majority-owned and effectively controlled by EU nationals. Since EasyJet is a European airline, a US takeover would need to ensure European ownership of at least 51%.
Q: How much is Castlelake offering per share? The latest offer is £6.90 per share. Previously, Castlelake had offered £6.50, £5.60, £6 and £6.25 per share, which were all rejected.
Q: What happens if the deal goes through? If Castlelake makes a firm offer and shareholders approve it, EasyJet would be taken private. It would no longer be listed on the London Stock Exchange, and Castlelake would become the new owner, likely focusing on long-term restructuring, fleet upgrades, and cost savings.
Castlelake has until 3 August to make a firm offer or walk away. If it makes a firm offer, a shareholder vote will follow. Regulatory approvals, especially concerning EU ownership rules, will also be needed.