US investment firm Castlelake has disclosed its £4.7 billion takeover bid for easyJet, following the airline’s rejection of its third proposal, thus intensifying a burgeoning acquisition contest. The latest all-cash offer from Castlelake places easyJet’s value at 625 pence per share, succeeding previous bids of 560p and 600p that were turned down. Castlelake, which manages assets worth about $36 billion from its headquarters in Minneapolis, stated that it opted to publicize the offer to enable shareholders to evaluate its attractiveness before the June 26 deadline for the takeover decision.
To comply with European regulations mandating that EU airlines be predominantly owned by European investors, Castlelake has collaborated with aviation leaders Peter Bellew and Mark Breen. The proposed arrangement involves an EU-controlled entity holding a majority stake in easyJet. However, easyJet has firmly dismissed the bid, labeling it as an opportunistic move to acquire the company at an undervalued price. The airline highlighted that the offer was made during a time when its share price is impacted by geopolitical uncertainties, arguing that it does not mirror the airline’s long-term growth potential.
EasyJet, based in Luton and ranking as one of Europe’s major budget airlines behind Ryanair and ahead of Wizz Air, also raised concerns about the clarity of Castlelake’s proposed ownership structure, asserting that the offer significantly undervalues the business and its future outlook. Despite easyJet’s rejection of the bid, the heightened investor interest has positively influenced the airline’s market performance. Over the past month, amid takeover speculation, easyJet shares have surged by approximately 40% and were trading higher following the announcement by Castlelake.
Faced with easyJet’s staunch resistance, Castlelake must now decide by June 26 whether to proceed with a formal takeover offer or withdraw from the potential deal. The investment firm’s frustration was evident as it expressed dissatisfaction with what it perceived as the airline board’s reluctance to engage constructively with its proposals. As the June deadline approaches, the unfolding situation remains a focal point for shareholders and market observers alike.