EasyJet Rejects Castlelake's Third Takeover Bid, Citing 'Opportunistic' Offer
The UK airline dismisses a £4.74 billion proposal from the US investment firm as an attempt to acquire the company "on the cheap."
EasyJet has once again rejected a takeover bid from US investment firm Castlelake, with the latest proposal valuing the UK airline at £4.74 billion. EasyJet's board stated that the offer is "highly opportunistic" and an attempt to acquire the company "on the cheap," deeming it not in the best interests of its shareholders.
This marks the third offer from Castlelake, which has already acquired a 2.14% stake in the FTSE 250-listed airline. The most recent proposal offered shareholders 625 pence per share, representing a 24% premium over the previous Friday's closing price. However, EasyJet shares climbed 2.9% to 518.6 pence on the day of the announcement.
EasyJet's share price has faced pressure due to rising jet fuel costs and subdued demand, exacerbated by the conflict in the Middle East. Despite these challenges, the airline has indicated that it remains on track to achieve an annual profit exceeding £1 billion. Takeover speculation has contributed to a 39% surge in EasyJet's share price over the past month.
Castlelake, in its public statement, asserted that its bid offers "compelling value" to shareholders and expressed a desire to support EasyJet as a stronger, more resilient European airline under European control. The firm indicated its ambition to respect the airline's assets and maintain its network. Under takeover regulations, Castlelake is required to either formalize its offer or withdraw by Friday.
EasyJet's board, however, maintains that the current offer is "highly opportunistic," made against the backdrop of the airline's temporarily depressed share price, and fundamentally undervalues the company and its future prospects. The airline also raised concerns about the "opaque" proposed ownership structure, which would involve Castlelake owning 49% and EU citizens, along with potentially other undisclosed investors, holding 51% to comply with EU ownership rules.
Market analysts suggest that a rebound in holiday demand, potentially linked to expectations of an end to the Middle East conflict, could bolster EasyJet shareholders' confidence in the company's ability to recover. EasyJet's strategic progress, including its expanding packaged holidays operation, is also seen as a positive factor. The situation reflects a broader trend of foreign entities targeting London-listed companies, raising concerns about the acquisition of undervalued British firms.