British budget airline easyJet has turned down a takeover, and the bidder is not backing off. On Monday, June 22, U.S. investment firm Castlelake made public a £4.74 billion (about $6.3 billion) offer to buy the carrier, taking its case directly to shareholders after easyJet’s board rejected three separate proposals this month. The airline, listed in London under the ticker EZJ, called the approach “opportunistic” and said it was not in the best interests of shareholders, accusing the American firm of trying to buy the company “on the cheap.”
Castlelake’s latest proposal, made on June 20, valued easyJet at 625 pence per share in cash, up from earlier rejected bids of 560 pence and 600 pence. The Minneapolis-based firm, which manages about $38 billion and is a major aviation investor, said it went public because of the board’s “unwillingness to engage meaningfully.” It already owns about 2.14% of easyJet through funds it manages, and framed its ambition as supporting the carrier as “a stronger, more resilient European airline under European control.”
The 625-pence offer represents a premium of roughly 57% to easyJet’s share price in late May, before Castlelake’s interest became known, and tops every published analyst price target issued since the airline’s April trading update. Castlelake argued the bid offers “compelling value” and would let shareholders judge its merits before a fast-approaching deadline.
easyJet pushed back on several fronts. The board said its share price had been temporarily depressed, partly by the hit to European travel demand from the Iran war, making the timing opportunistic. It also raised “considerable reservations” about Castlelake’s proposed ownership structure, which it called “opaque.” The airline said it remained focused on its medium-term targets and on growing its higher-margin holidays business, which has become a rising share of profit.
That structure is central to the fight. European Union rules require carriers like easyJet to stay majority-owned and controlled by EU nationals. To comply, Castlelake proposed taking a 49% stake, with the remaining 51% held by EU nationals and undisclosed others, and partnered with veteran aviation executives Peter Bellew and Mark Breen. easyJet countered that the arrangement was too unclear to form any basis for assessing the bid.
The clock is now the story. Under UK takeover rules, Castlelake faces a “put up or shut up” deadline of 5 p.m. on Friday, June 26, by which it must either announce a firm intention to make an offer or walk away for six months. The firm said its bid would be fully funded through a mix of committed equity and debt, with Goldman Sachs expressing confidence in arranging the money — though Castlelake cautioned there is no certainty a formal offer will follow.
Investors took notice. easyJet shares rose more than 5% in early Monday trading to around 530 pence, near their highest in years, and are up about 36% over the past month on takeover speculation. “There will be increased pressure on the board this week,” said Goodbody Stockbrokers analyst Dudley Shanley, though he noted some shareholders could be disappointed by the absence of an established European airline partner in the deal.
easyJet is one of Europe’s three largest low-cost carriers, behind Ryanair and Wizz Air. Founded in 1995 by British-Cypriot entrepreneur Stelios Haji-Ioannou and based in Luton, it employs more than 16,000 people and flew over 90 million passengers last year across 38 countries and more than 1,200 routes. Whether it stays independent now rests on a few days of pressure: Castlelake must decide by Friday whether to formalize its bid, and easyJet’s shareholders must weigh whether a board that keeps saying no is leaving money on the table.
JBizNews Desk
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