EasyJet has reached an agreement in principle with U.S. investment firm Castlelake on a possible cash takeover worth about £5.5 billion. The proposal values the airline at 690 pence per share, above the 558 pence closing price recorded before the announcement.
The agreement is not yet a binding offer. Castlelake must still secure regulatory clearances, complete required approvals and either announce a firm intention to bid or withdraw by 5:00 p.m. BST on August 3.
EasyJet’s board said the financial terms are at a level it would be minded to recommend to shareholders if a firm offer is made. The deal would also require shareholder approval.
Castlelake Raised Its Offer After Earlier Rejections
The latest proposal follows several rejected approaches from Castlelake, which manages about $36 billion in assets and holds around 2.14% of EasyJet through funds it manages. Earlier offers were worth 560 pence, 600 pence, 625 pence and 650 pence per share.
EasyJet had previously described those proposals as undervaluing the company and accused Castlelake of seeking to buy the airline while its share price was under pressure. Before takeover interest emerged in June, EasyJet’s shares had fallen by more than 30% over the previous year.
The company said its share price had been temporarily affected by travel-sector pressures linked to the U.S.-Israel war with Iran. It has also been dealing with rising costs and wider uncertainty across European aviation.
EU Ownership Rules Remain a Hurdle
A major obstacle is European airline ownership regulation. EasyJet must remain majority owned and controlled by European investors to preserve its operating rights within the European Union.
Castlelake is based in the United States, but it has outlined plans to structure the transaction in a way that complies with EU rules. Reuters reported that Castlelake would hold 49% of the bidding entity, with the remaining stake controlled by two EU nationals, including former EasyJet chief operating officer Peter Bellew.
EasyJet operates more than 1,200 routes across 35 European countries and employs more than 19,000 people. Its airport network includes major bases in the UK and across continental Europe.
Castlelake said it respects EasyJet and its employees and intends to support the airline’s growth and transformation. EasyJet has been working to improve profitability through its holidays business, fleet modernization and operational recovery after the pandemic.
Featured image credits: freeimageslive Marius Photography
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