EasyJet Reaches Tentative Agreement for Potential Takeover by US Firm
The low-cost airline has an agreement in principle with Castlelake for a £5.2 billion deal, following previous rejections of the investment firm's offers.
EasyJet has announced an agreement in principle with US investment firm Castlelake for a potential takeover offer valued at approximately £5.2 billion. The proposal, put forward on July 4, values each EasyJet share at £6.90.
This development follows Castlelake's previous four takeover bids, which EasyJet's board had rejected. The prior offers ranged from £5.60 to £6.50 per share, and the airline had accused Castlelake of attempting to acquire the company at a low price.
While an agreement in principle has been reached, the deal is not yet confirmed. Castlelake must still secure the necessary regulatory clearances and approvals for the transaction. A significant regulatory consideration is EasyJet's status as a European company, which requires it to be at least 51% owned by a European entity under EU rules. Castlelake, a US-based firm, has indicated its intention to comply with this requirement.
The investment firm has until August 3 at 5:00 PM BST to formally announce its intention to make an offer or to withdraw its bid. Should a firm offer be made, it would then be subject to a shareholder vote.
EasyJet's board indicated that the financial terms of the proposed offer are at a level that they would be prepared to recommend to EasyJet shareholders if a firm offer materializes. EasyJet, one of Europe's largest airlines, employs over 19,000 people and operates approximately 1,200 routes across 35 European countries.
Previously, EasyJet had attributed its share price decline, partly due to the impact of geopolitical events on the travel sector, stating its stock had been "temporarily depressed." Prior to the initial bid emerging in June, EasyJet's shares had fallen by more than 30% over the preceding year. On Friday, EasyJet shares closed at £5.58.
Castlelake manages assets totaling $36 billion (£27.3 billion). In its announcement, EasyJet stated that Castlelake expressed "tremendous respect for easyJet and its people" and intends to support the airline's future growth and transformation into a stronger, more resilient European carrier.