EasyJet has reached an agreement in principle with US investment firm Castlelake over a potential takeover offer worth approximately £5.2 billion, the low-cost airline announced on Sunday. The proposed offer of £6.90 per share follows four previous bids that easyJet's board rejected, accusing Castlelake of trying to buy the company "on the cheap."
Background of Offers
Castlelake, which owns a stake of about 2.14% in easyJet through its managed funds, made four earlier proposals that the board dismissed. The offers were valued at £6.50, £5.60, £6.00, and £6.25 per share respectively. On 4 July, Castlelake put forward the latest proposal at £6.90 per share, leading to the agreement in principle announced on Sunday. The following table summarises the bids:
| Offer | Value per share | Status |
|---|---|---|
| 1st | £6.50 | Rejected |
| 2nd | £5.60 | Rejected |
| 3rd | £6.00 | Rejected |
| 4th | £6.25 | Rejected |
| 5th (proposed) | £6.90 | Agreement in principle |
Castlelake's Rationale and easyJet's Position
Castlelake, with assets under management worth $36bn (£27.3bn), emphasised its "tremendous respect for easyJet and its people" and its intention to support the airline's future growth and transformation into a "stronger, more resilient European airline," according to a statement from easyJet. The board noted that the financial terms of the proposed offer "are at a value that the Board would be minded to recommend to easyJet shareholders" should a firm offer be made.
EasyJet is one of Europe's largest airlines, employing more than 19,000 people and operating around 1,200 routes across 35 European countries. The airline had previously argued that its share price had been "temporarily depressed" partly due to the impact of the US-Israel war with Iran on the travel sector. On Friday, easyJet shares closed at £5.58 each; before the first bid emerged in June, the stock had fallen by more than 30% in the past year.
Regulatory Hurdles
A significant regulatory obstacle is that easyJet, as a European company, must be 51% owned by a European entity under EU rules. Castlelake is a US firm, though it has outlined how it would endeavour to comply with this requirement. The agreement in principle does not constitute a confirmed deal; Castlelake must now secure the necessary regulatory clearances and approvals for the transaction to proceed.
Next Steps and Timeline
Castlelake has until 17:00 BST on 3 August to either announce a firm intention to make an offer or declare that it does not intend to do so. If a formal offer is made, it would be subject to a shareholder vote. The board's conditional support signals a likely recommendation, but the outcome hinges on regulatory approvals and shareholder approval.
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