EasyJet Founder Holds Out for 'Eyewatering' Bid as US Firm's Latest Offer Rejected

EasyJet has rejected a fourth bid from American investment firm Castlelake, valued at £4.9 billion, stating the offer of 650p per share "substantially" undervalues the company. However, the budget airline has left the door open for a revised proposal, agreeing to provide Castlelake with "limited commercial information" that "might produce a more attractive proposal that better reflects the value of EasyJet and its prospects."

Sir Stelios Haji-Ioannou, the founder of EasyJet who retains a 15% stake in the airline, indicated through a source that he would only consider backing a takeover if the price was sufficiently high. "It would need to be an eyewatering large price to persuade him and the family to sell," the source told the Mail.

The airline has also requested that takeover regulators extend the deadline for Castlelake to make a firm offer or withdraw from the process. The deadline has been pushed from June 25 to July 5.

Castlelake has made four offers for EasyJet, with previous proposals ranging from 560p to 650p per share. The airline is reportedly seeking at least 700p per share, which would amount to approximately £5.3 billion. EasyJet had previously dismissed Castlelake's third bid, worth £4.7 billion, accusing the firm of attempting to acquire the airline "on the cheap."

Despite the rejection, EasyJet shares rose 6.4%, or 34.6p, to 574.2p following the news, reflecting a nearly 70% increase in value over the past month. Analysts suggest that the deadline extension indicates a deal may still be possible. Chris Beauchamp, chief market analyst at IG, noted that the extension has been interpreted as a sign that "some kind of deal is doable."

Castlelake, which currently holds a 2.14% stake in EasyJet, has proposed structuring the potential acquisition through a new entity where it would hold a 49% stake, with the remaining 51% owned by EU citizens. This structure is intended to comply with EU regulations requiring airlines to be majority-owned by EU citizens.

Sir Stelios Haji-Ioannou founded EasyJet in 1995. He and his family remain the largest shareholders in the company.