Castlelake, a U.S. investment firm managing roughly $36 billion in assets, has disclosed its £4.7 billion takeover proposal for the British budget airline easyJet after the airline dismissed its third offer. The latest bid from Castlelake values easyJet at 625 pence per share, following previous offers of 560p and 600p that were also declined. The investment firm decided to make the proposal public, aiming to allow shareholders to evaluate the bid ahead of the June 26 deadline for the takeover.
Frustrated by what it perceives as the airline’s board’s lack of meaningful engagement, Castlelake has partnered with aviation veterans Peter Bellew and Mark Breen to navigate European ownership regulations. These rules require EU airlines to be predominantly owned by European investors. The proposed structure would involve an EU-controlled entity holding a majority stake in easyJet, aligning with these regulatory requirements.
Despite the strategic planning, easyJet has firmly rejected Castlelake’s proposal, labeling it as an opportunistic attempt to purchase the company at a discounted rate. The airline contends that the offer was made during a period of geopolitical uncertainty impacting its share price, which, according to easyJet, does not reflect its true long-term growth potential. Additionally, the airline has raised concerns about the transparency of Castlelake’s proposed ownership structure and criticized the bid as fundamentally undervaluing the business and its future prospects.
The rejection has not deterred investor interest, as evidenced by easyJet’s improved market performance. Over the past month, the airline’s shares have climbed approximately 40% amid the takeover speculation and continued to trade higher following Castlelake’s announcement. EasyJet, based in Luton, stands as one of Europe’s leading budget airlines, second only to Ryanair and ahead of Wizz Air in the low-cost carrier sector.
With the June 26 deadline looming, Castlelake must now decide whether to proceed with a formal takeover offer or withdraw from the pursuit. The unfolding developments in this takeover battle will likely continue to attract significant attention from investors and industry analysts alike.