US investment firm Castlelake has publicly confirmed a £4.7bn takeover bid for easyJet, marking its third attempt to acquire the UK-based budget carrier. The airline’s board has rejected the offer of 625p per share, describing the bid as an opportunistic attempt to purchase the company at a depressed valuation. Castlelake faces a regulatory deadline of June 26 to clarify its intentions regarding a formal offer.
Why did the easyJet board reject the latest offer?
EasyJet’s board of directors stated that the 625p-per-share offer significantly undervalues the airline’s long-term prospects. According to a company statement released Monday, the board considers the bid “highly opportunistic” and claims the valuation relies on share prices affected by Middle East conflicts and short-term earnings fluctuations. While Castlelake’s previous offers stood at 560p and 600p, the board remains firm that the current proposal does not reflect the airline’s true market position.
Before the recent takeover speculation, easyJet shares had dropped by approximately 20% since the start of the year. However, the stock has gained 36% over the last month as market interest in a potential acquisition grew.
How does Castlelake plan to satisfy EU ownership rules?
To navigate post-Brexit regulations requiring European airlines to be majority-owned by EU nationals, Castlelake has structured its bid through a partnership with EU-based investors. The firm has brought on Peter Bellew, former chief operating officer at easyJet and Ryanair, and Mark Breen, CEO of Dublin-based Oneiros Aerospace. According to Castlelake, this new ownership structure ensures that an EU-controlled entity would hold a controlling stake in the carrier, mirroring compliance models used by other regional airlines.
What are the regulatory hurdles for a potential takeover?
Under City takeover rules, Castlelake is under a strict timeline to formalize its position. The firm, which manages $36bn in assets, must announce whether it intends to proceed with a firm offer by 5pm on June 26. EasyJet management has criticized the proposed ownership structure as “opaque,” though Castlelake maintains that its partnership approach is a “clear, deliverable solution” to meet all regulatory requirements.
Comparative Overview of Takeover Bids
| Proposal Stage | Price per Share | Valuation |
|---|---|---|
| Initial Approach | 403p | £3bn |
| Second Proposal | 600p | N/A |
| Third Proposal | 625p | £4.7bn |
Frequently Asked Questions
- Who is Castlelake? Castlelake is a Minneapolis-based investment firm managing $36bn in assets, known for previous involvement in the aviation sector, including the restructuring of Scandinavian Airlines (SAS).
- Why does EU ownership matter for easyJet? Post-Brexit rules require that airlines operating within the EU remain majority-owned by EU nationals to maintain their flying rights.
- Has easyJet faced takeover attempts before? Yes. In 2021, the airline rejected an approach from Wizz Air, and reports in 2023 indicated that shipping firm MSC was considering a bid.
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