EasyJet rejects Castlelake's £4.93bn takeover bid but opens books in hope of higher offer

The fourth approach

EasyJet's board on Thursday rejected a fourth unsolicited takeover proposal from US investment firm Castlelake, valuing the low-cost carrier at £4.93 billion ($6.5 billion). The £6.50-per-share offer, which followed earlier bids of £5.60, £6.00 and £6.25 a share, was deemed by the Luton-based airline to "substantially undervalue" the company and its prospects. Despite the unanimous rebuff, the company agreed to grant Castlelake limited access to commercial data, believing that the move could yield a "more attractive proposal". Castlelake now has until 17:00 BST on 5 July to table a firm offer or walk away under UK takeover rules.

“The narrative has definitively changed. EasyJet are now effectively in negotiations with Castlelake, which means the business is for sale at the right price.”

Ownership puzzle

Castlelake's consortium would own 49% of the airline alongside co-investors including Brookfield Asset Management, while the remaining 51% would be held by EU nationals (former Malaysia Airlines CEO Peter Bellew and industry veteran Mark Breen) in a structure designed to satisfy European Union ownership rules requiring majority EU control. Analysts said the success of any deal hinges on price rather than the precise shareholding arrangement. EasyJet's board remains concerned about the bid's deliverability, insisting on "satisfactory assurances and commitments" before it would engage further.

Market response

EasyJet shares climbed roughly 6% to 7% in early trading on Thursday, a sharp relief rally after the stock had fallen about 30% over the past year. The Iran conflict has pushed up fuel costs and contributed to weaker summer bookings, leading the airline to warn last month that its full-year outlook remained uncertain. EasyJet nonetheless maintains that it is in a position of financial strength, with a solid cash position and a medium-term target of more than £1 billion in pre-tax profit.

1st bid5.6

2nd bid6

3rd bid6.25

4th bid6.5

1st bid

5.6 £/share

2nd bid

6 £/share

3rd bid

6.25 £/share

4th bid

6.5 £/share

Data from the article text

Wider interest

Air France-KLM CEO Benjamin Smith told the Portuguese newspaper Observador that his group might be interested in acquiring some easyJet assets should Castlelake's takeover eventually proceed. Smith stressed that Air France-KLM is not involved in any current bid and that no formal offer has been tabled. His comments underscore the potential for a break-up or disposal of parts of the carrier if a deal emerges.