EasyJet Plc has accepted a sweetened fifth offer from US investment firm Castlelake LP, valuing the budget airline at £5.2 billion (about $7 billion), or 685 pence per share. While this is less than the £7 per share some investors desired, it reflects a significant increase from prior proposals and represents a premium over EasyJet's recent trading prices. This decision by EasyJet's board marks a shift from their previous rejections of Castlelake's earlier, lower bids.
Castlelake's latest offer was made on the deadline of July 5 and was the culmination of an extended negotiation period. The deal is structured as a consortium, with Castlelake and co-investors, including Brookfield Asset Management, owning 49% of the acquiring entity. The remaining 51% will be held by EU nationals Peter Bellew and Mark Breen. This ownership structure is crucial for complying with EU airline regulations, which mandate majority EU ownership and control.
EasyJet's board had previously shown a willingness to entertain a higher bid, having extended the bidding deadline to July 5. The airline's shares had been trading below prior rejected offers, indicating market skepticism about a deal at those levels. Goodbody Stockbrokers analyst Dudley Shanley noted a definitive change in the narrative from the airline's side leading up to this agreement.
The accepted offer comes after EasyJet's stock experienced considerable volatility. Castlelake's interest, which emerged in late May, initially boosted EasyJet's share price by over a third. However, the stock still traded about 92 pence below Castlelake's fourth rejected offer of 650 pence per share, leaving a market gap of approximately £697 million. Castlelake manages about $38 billion and has invested over $24 billion in aviation since 2005, positioning it as a significant player in such a large acquisition. EasyJet itself holds considerable assets, with a reported book value of £5.0 billion in owned assets and £4.7 billion in liquidity.
