EasyJet flies to London: it has rejected Castlelake’s new offer but is open to dialogue
The final offer is expected by 5 July
(Il Sole 24 Ore Radiocor) - EasyJet shares have soared on the London Stock Exchange after the company rejected Castlelake’s latest takeover bid – its fourth – whilst at the same time leaving the door open for talks with the US investment firm. EasyJet stated that on 23 June it had received ‘a new indicative and conditional proposal from Castlelake’ at a price of £6.50 per share. The proposal has a total value of approximately £4.9 billion. EasyJet’s board of directors, which had already rejected the three previous proposals, has also rejected the new offer, considering that this too continues to ‘substantially undervalue the company and its prospects’ and that it ‘raises significant questions about its feasibility’. However, the board has agreed to grant Castlelake ‘access to limited commercial information’, which ‘could lead to a more attractive proposal’, and has agreed to extend the deadline for submitting a final offer – initially set for Friday – to 5.00 pm on Sunday 5 July. This “will allow Castlelake to draw up an even better proposal and to address the board’s concerns regarding the actual feasibility of the transaction”, the airline states in its press release.
On Monday, easyJet announced that it had rejected a third bid from Castlelake of 625 pence per share. The US investment firm had submitted an initial offer in cash for the airline of 560 pence per share on 12 June, followed by a second bid at 600 pence, submitted on 17 June. EasyJet also stated that it remains concerned about the ownership structure of the bid, as well as the timeframe required, and expects ‘satisfactory assurances and commitments on these points’. Castlelake has formed a partnership with Peter Bellew and Mark Breen, individual investors who are citizens of the European Union. Bellew is a former chief operating officer at easyJet, whilst Breen is the managing director of the consultancy firm Oneiros Aerospace and previously led the Saudi low-cost airline flyadeal.
On Monday, easyJet described the proposed ownership structure as ‘opaque’, stating that the acquiring company would be 49% owned by Castlelake and 51% by EU citizens and ‘potentially by other investors not yet disclosed’. In a press release issued on 25 June, the company stated that it is in a “solid position, underpinned by an investment-grade balance sheet and a positive net cash position, as well as high levels of customer satisfaction and strong employee engagement”. The group is also “very confident” in its strategy and its ability to create attractive long-term value for shareholders.
In recent weeks, EasyJet has also denounced the proposal as ‘highly opportunistic, made against the backdrop of a temporarily depressed EasyJet share price’, due to the situation in the Middle East, which is having an impact on airlines. In May, the group reported a larger loss than in the previous year for the first half of the financial year, due to the fallout from the US-Iran conflict, and warned that the second half would also be affected. Founded in 2005, Castlelake manages approximately $38 billion in assets, mainly in the aerospace sector. In 2023, it acquired around 32 per cent of the Scandinavian airline SAS, a stake that is currently being acquired by Air France-KLM.
