British budget airline easyJet has agreed in principle to a takeover bid from U.S. investment firm Castlelake. The deal values easyJet at up to £5.5 billion ($7.34 billion) on a fully diluted basis, with an offer of £6.90 per share. This represents a substantial 73% premium to easyJet's closing price on May 29, when Castlelake first disclosed its interest to British regulators. Despite the agreement in principle, Castlelake has until August 3 to make a firm offer, and the deal is not yet confirmed.
This is a significant increase from previous offers, as easyJet had rejected four prior bids from Castlelake, which ranged from £5.60 to £6.50 per share. EasyJet had previously described Castlelake's approaches as "highly opportunistic," particularly given the airline's depressed share prices due to the impact of the Iran conflict on the travel sector. Castlelake, which manages $36 billion in assets and is a major lender to airlines, currently holds about a 2.14% stake in easyJet through managed funds.
A key hurdle for the acquisition involves European Union regulations that require airlines operating in the bloc to be majority owned and controlled by EU nationals. Castlelake, a U.S. firm, has outlined a plan to address this by having two EU nationals, former Malaysia Airlines CEO Peter Bellew and senior industry executive Mark Breen, own 51% of the bidding vehicle, with Castlelake and other co-investors holding the remaining 49%. Bellew previously served as easyJet’s Chief Operating Officer from 2019 to 2022. If a firm offer is made, it would still require shareholder approval. EasyJet, founded in 1995 by Stelios Haji-Ioannou, operates 355 aircraft across more than 1,200 routes in 38 European countries.
