EasyJet Rejects Fourth Takeover Bid From US Firm Castlelake
Budget airline cites undervaluation but extends deadline, suggesting potential for a revised offer.
EasyJet has rejected a fourth takeover bid from US firm Castlelake, a proposal valued at £4.9 billion or 650 pence per share. Despite the rejection, the budget airline has left the door open for further negotiations, indicating a potential for a deal to be reached.
The airline's board stated that Castlelake's latest offer "substantially" undervalued the company. However, EasyJet has agreed to provide Castlelake with "limited commercial information," a move that may lead the bidder to present a "more attractive proposal that better reflects the value of EasyJet and its prospects."
EasyJet has also requested that takeover regulators extend the deadline for Castlelake to make a final offer or withdraw from negotiations. The original deadline was June 26, with the extension sought until July 5.
Sources suggest EasyJet is holding out for a valuation of at least 700 pence per share, equating to approximately £5.3 billion. Castlelake's previous offers to the EasyJet board were 560 pence, 600 pence, and 625 pence per share before the latest bid.
Earlier in the week, EasyJet had accused Castlelake, which currently holds a 2.14 percent stake in the FTSE 250 airline, of attempting to acquire the company at a low price. The airline also expressed ongoing concerns regarding Castlelake's proposed ownership structure, seeking "satisfactory assurances and commitments" for any future offer. Castlelake's initial proposal involved a joint venture where Castlelake would own 49 percent, with the remaining 51 percent held by EU citizens and potentially other unnamed investors.
Market analysts view the extension of the deadline as a positive sign for a potential deal. Chris Beauchamp, chief market analyst at IG, commented that while EasyJet's board may be presenting a strong stance in rejecting the bid, the extension suggests the possibility of a negotiated outcome. He noted that investors appear to anticipate an improved offer, contributing to the recent strength in EasyJet's share price.
EasyJet's shares had previously been impacted by rising jet fuel costs and reduced demand attributed to the conflict in the Middle East. However, speculation surrounding a potential takeover has contributed to a recovery in its stock value.