US investment firm Castlelake has unveiled a £4.7 billion takeover proposal for easyJet after the airline dismissed its third offer, escalating a heated acquisition contest. The latest bid, an all-cash offer valuing easyJet at 625 pence per share, follows previous offers of 560p and 600p that were also rejected. Castlelake, managing about $36 billion in assets from its Minneapolis headquarters, decided to make the offer public, allowing shareholders to evaluate it before the June 26 deadline.
Expressing frustration with what it perceives as a lack of serious engagement by easyJet’s board, Castlelake aims to navigate European ownership regulations, which mandate that EU airlines must maintain majority EU ownership. To comply, the firm has teamed up with aviation executives Peter Bellew and Mark Breen to create an EU-controlled entity that would hold a majority stake in the airline, ensuring regulatory compliance.
Despite Castlelake’s strategic maneuvering, easyJet has firmly rejected the proposal, labeling it an opportunistic attempt to seize the company at a reduced valuation. The airline contends that the offer comes at a time when its share price is negatively impacted by geopolitical uncertainties, failing to reflect easyJet’s long-term growth potential. Additionally, the airline has raised concerns about the transparency of Castlelake’s proposed ownership structure, arguing that the offer underestimates the airline’s value and future prospects.
Nonetheless, the prospect of a takeover has spurred investor interest, significantly boosting easyJet’s market performance. Over the past month, amid takeover speculation, the airline’s shares have surged approximately 40% and continued to trade higher following Castlelake’s announcement. EasyJet, based in Luton, holds a significant position in the European budget airline market, ranking behind Ryanair and ahead of Wizz Air.
As the deadline approaches, Castlelake faces a crucial decision: whether to proceed with a formal takeover bid by June 26 or abandon the pursuit. The unfolding situation remains closely watched by investors and industry analysts, as the implications of such a deal could have lasting effects on the competitive landscape of European low-cost carriers.