- EasyJet has agreed to be acquired by U.S. private equity firm Castlelake in a deal valuing the airline at £5 billion ($6.7 billion). The board and Castlelake reached an agreement in principle after four earlier bids were rejected.
- The news sent EasyJet shares up nearly 10% on the London Stock Exchange. The board said it was "minded to recommend" Castlelake's £6.90-per-share offer to shareholders.
- EasyJet's stock traded well below Castlelake's latest takeover bid, signaling investor concerns about potential barriers to the £5 billion-plus deal.
EasyJet's board has agreed in principle to a £5 billion ($6.7 billion) takeover by Castlelake, which must submit a formal bid by August 3.12
"Castlelake has emphasized its tremendous respect for EasyJet and its people, along with its intention to support its future growth and transformation to a stronger, more resilient European airline," the airline stated.
Despite a nearly 10% stock jump, shares remain below Castlelake's offer of £6.90 per share, raising doubts about the deal's viability.
“There’s still some doubts over ownership structure and regulatory approval, particularly with this deal potentially getting political attention with EasyJet being a well-known U.K. company,” said analyst Conroy Gaynor.
Castlelake, managing approximately $37 billion in assets, aims to support EasyJet's fleet modernization, which is crucial for its long-term competitiveness.
EasyJet, founded in 1995, has faced challenges recently, including rising costs that have impacted profits.
The airline's most valuable assets include a fleet of 356 modern Airbus A320 aircraft and prime landing slots in major cities.
“I’m sure they recommended partly knowing which way the wind was blowing with Stelios,” said analyst Stephen Furlong, referring to EasyJet's founder, who holds a significant stake.
As a U.S. entity, Castlelake cannot fully control EasyJet due to U.K. regulations requiring majority ownership by regional nationals, necessitating a partnership.
“EasyJet's board said it was 'minded to recommend' Castlelake's £6.90-per-share offer to shareholders after rejecting four earlier bids. Shares jumped nearly 10% on the London Stock Exchange but still trade below the bid price, signaling investor concern about potential barriers to the deal.”
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