EasyJet and Castlelake Reach Agreement in Principle
EasyJet has reached an agreement in principle with a US investment firm, Castlelake, regarding a potential takeover offer valued at approximately £5.2 billion.
The low-cost airline based in Luton had previously declined four takeover bids from Castlelake, which holds about a 2.14% stake in EasyJet through the funds it manages.
EasyJet stated that those earlier offers were priced at £6.50, £5.60, £6, and £6.25 per share, and had accused Castlelake of attempting to acquire the company "on the cheap."
On Sunday, EasyJet's board of directors and Castlelake announced they had reached an agreement in principle on a proposal submitted on 4 July, valued at £6.90 per share.
This agreement in principle does not confirm a finalized deal. Castlelake must obtain regulatory approvals and other necessary authorizations for the transaction to proceed.
Regulatory Considerations
A significant regulatory challenge is that EasyJet, as a European company, must comply with EU regulations requiring that it be at least 51% owned by a European entity.
Castlelake, being a US-based firm, has previously outlined plans to comply with this ownership rule.
The firm has until 17:00 on 3 August to either announce a firm intention to make an offer or declare that it does not intend to proceed.
If a formal offer is made, it will be subject to a shareholder vote.
Board's Position and Company Profile
EasyJet's board stated on Sunday that the financial terms of the proposed offer "are at a value that the Board would be minded to recommend to easyJet shareholders," should a firm offer be presented.
EasyJet is among Europe's largest airlines, employing over 19,000 people and operating approximately 1,200 routes across 35 European countries.
The company has previously indicated that its share price had been "temporarily depressed," partly due to the impact of the US-Israel conflict involving Iran on the travel sector.
EasyJet shares closed at £5.58 each on Friday. Prior to the initial bid announcement in June, the stock had declined by more than 30% over the previous year.
Castlelake manages assets totaling $36 billion (£27.3 billion).
Statements from EasyJet and Castlelake
In announcing the agreement in principle, EasyJet noted that Castlelake had:
"emphasised its tremendous respect for easyJet and its people, along with its intention to support its future growth and transformation to a stronger, more resilient European airline".
