EasyJet is on the cusp of transitioning from a publicly traded company to private ownership after reaching an agreement in principle with US investment firm Castlelake for a takeover. The proposed deal, announced on Sunday, July 5, values the European airline at up to £5.5 billion, or approximately $7.34 billion, based on a diluted share price of £6.90. This potential acquisition marks a significant shake-up in Europe's aviation sector. The airline had previously rejected four lower offers from Castlelake, accusing the firm of trying to buy it "on the cheap." EasyJet's board has indicated that it would be "minded to recommend" this latest offer to shareholders should a firm proposal materialize.
Castlelake's offer represents a significant premium, with the £6.90 per share proposal being a 73% increase over EasyJet's closing price on May 29, when Castlelake first disclosed its interest. EasyJet's shares had closed at £5.58 on Friday before the Sunday announcement and jumped over 10% in early trading on Monday. The airline's share price had fallen more than 30% in the past year prior to the initial bid news, partly due to the impact of the Iran conflict on the aviation sector. Despite these challenges, EasyJet possesses valuable assets, including slot positions at major airports like London Gatwick, Paris, and Geneva, a fleet of 355 aircraft, a strong brand, and a growing package holidays business.
Regulatory hurdles remain, particularly European Union regulations that require airlines operating in the bloc to be majority-owned by EU citizens. To address this, Castlelake, a US firm with $36 billion in assets under management, has proposed a partnership where it would own 49% of the bidding vehicle, with the remaining majority held by two EU nationals: Peter Bellew, former COO of EasyJet and Ryanair, and Mark Breen, an aerospace consultancy owner. Castlelake has until 5:00 PM BST on August 3 to make a firm offer or withdraw its intention. The deal comes as the British market is seeing a record year for mergers and acquisitions, with London-listed companies attracting buyers due to weaker valuations.
