US investment firm Castlelake has unveiled a £4.7 billion offer to take over budget airline easyJet, after the airline dismissed its third bid. The latest proposition values the airline at 625 pence per share, following previous offers of 560p and 600p that were also turned down. As the takeover deadline of June 26 looms, Castlelake chose to publicize its proposal, encouraging shareholders to weigh its potential benefits.
Expressing dissatisfaction with easyJet’s board, Castlelake criticized what it perceives as a lack of meaningful engagement from the airline’s leadership on its offers. To comply with European ownership regulations, requiring EU airlines to maintain majority European ownership, Castlelake has teamed up with aviation specialists Peter Bellew and Mark Breen. The strategy involves an EU-controlled entity holding a majority stake in easyJet under the proposed arrangement.
Despite these efforts, easyJet firmly rejected Castlelake’s proposal, labeling it as an attempt to acquire the company at a reduced valuation. The airline pointed out that the offer came at a time when its share price is impacted by geopolitical instability, underlining that the current valuation does not account for its long-term growth prospects. Additionally, easyJet raised concerns about the transparency of the proposed ownership structure, asserting that the offer undervalues the company and its future potential.
Nonetheless, the takeover speculation has positively influenced easyJet’s market performance, with shares rising approximately 40% over the past month. The airline’s stock saw further increases following the announcement by Castlelake. EasyJet, based in Luton, ranks as one of Europe’s leading low-cost carriers, positioned between Ryanair and Wizz Air.
With the June 26 deadline approaching, Castlelake faces a critical decision: whether to proceed with a formal takeover offer or step away from the pursuit. The outcome will determine the future dynamics between the investment firm and the European budget airline giant.