EasyJet has once again rejected Castlelake’s offer but is leaving the door open
For the fourth time, the low-cost airline has rejected the Americans’ improved offer but has granted more time for a revised bid. The share price is up 7% on the stock market
by Mara Monti
EasyJet is playing for time and leaving the door open for talks with Castlelake. The board of the British airline has rejected the US fund’s fourth revised bid, which values the group at around 4.95 billion pounds through an offer of 6.50 pounds per share, but at the same time has extended the deadline until 5 July by which the bidder must decide whether to proceed or withdraw.
The decision grants US investors a further nine days to consider a possible revised bid and marks a change in tone compared with previous weeks, which were characterised by a bitter standoff between the parties. The market interpreted the move as a sign of openness: easyJet shares rose by as much as 8 per cent in early trading. However, the price remains 14 per cent below Castlelake’s latest offer, but more than 30 per cent higher than the levels seen before the initial bid, which was made around a month ago.
According to observers, the fund may now be considering a new bid, with a valuation that, in some scenarios, could reach as high as 7 pounds per share. A key element of the latest proposal is the revision of the transaction’s ownership structure, designed to overcome the regulatory constraints that limit the control of European airlines by non-EU investors.
The new plan provides for the entry of Brookfield Asset Management and a majority stake held by European nationals, including former aviation executives Peter Bellew and Mark Breen. For Castlelake, a US-based company, this is a necessary step: European legislation prevents non-European entities from exercising effective control over an EU airline.
From an industrial perspective, easyJet continues to be regarded as a valuable asset. Analysts highlight its relatively low level of debt and growth prospects that could see operating profit approach one billion pounds by 2030. On the other hand, the company faces a significant investment programme to renew its fleet, with the arrival of new aircraft from the Airbus A321 family. Castlelake has reiterated on several occasions that it has no intention of breaking up the group. This is a significant clarification, given that Bernstein’s analysts believe that, in a break-up scenario, the company’s theoretical value would be higher than that reflected in the current offer.
