(July 6): easyJet Plc agreed in principle to a takeover offer of more than £5 billion ($8.6 billion) from Castlelake LP, which swooped in as the UK budget carrier was reeling from soaring jet fuel prices and suppressed demand after the Iran war.
Castlelake’s offer of £6.90 per share in cash gives the airline an equity value of £5.2 billion. That valuation increases to £5.5 billion on a fully diluted basis, an easyJet spokesperson said. The bid was Castlelake’s fifth, with easyJet calling the previous proposals “highly opportunistic” and saying the US investment firm was trying to buy the airline “on the cheap.”
easyJet closed Friday at about £5.58 per share in London trading. The new offer is about 6% higher than the previous one of £6.50 per share. In addition, the two sides agreed Sunday to extend the “put up or shut up” deadline for a firm offer to Aug 3 at 5pm London time.
“There can be no certainty that any firm offer will be made, even if any pre-conditions are satisfied or waived,” according to the statement. It also said Castlelake has “tremendous respect” for the airline and employees, and intends to support the carrier’s future growth and fleet modernisation programme.
The two sides have sparred over the potential deal in the past month. The investment firm said easyJet’s board has shown “unwillingness to engage meaningfully,” taking its bid directly to shareholders.
Castlelake first showed interest in easyJet on May 29 when a four-week deadline was set. Within that time, the firm offered escalating bids of £5.60, £6.00, £6.25 and then £6.50 — all of which were rebuffed by the airline.
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easyJet changed its tone last week after Castlelake’s latest bid. Although the carrier said this offer still fell short, it sought a nine-day deadline extension to July 5 and granted the firm some access to limited commercial information.
easyJet’s most attractive assets include a fleet of 356 modern Airbus SE A320 family aircraft; an orderbook of 287 planes with an additional 100 purchase rights, and prime landing slots in London, Milan and Geneva. The company’s biggest shareholder is the family of founder Stelios Haji-Ioannou with a 15.3% stake. They haven’t commented publicly.
As part of the bid, Castlelake has teamed with Mark Breen and Peter Bellew, who was an executive at easyJet before leaving abruptly in 2022. The bidding group also includes Brookfield Asset Management Ltd.
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As a US entity, Castlelake is unable to gain full control of easyJet because the airline operates under UK and European rules that require majority ownership and control by regional nationals. That means the investment firm needs a partner.
The deal would take private an airline that went public in November 2000 at £3.10, according to data compiled by Bloomberg. Shares reached an all-time high of £15.84 in early 2007 amid an aggressive expansion across Europe.
Lately, though, the budget carrier has been under pressure from surging jet fuel prices because of the Iran conflict. It reported a loss in the first half of the year as well as a drop in summer bookings.
Uploaded by Magessan Varatharaja
