EasyJet has agreed in principle to a £5.5bn takeover by the US investment firm Castlelake, taking Britain's biggest low-cost carrier private. The deal, announced on Sunday evening, comes after weeks of negotiations and several rejected offers.
Deal Details and Share Price
The airline said it was minded to accept an offer at £6.90 a share. If completed, the deal could be worth nearly £800m for easyJet's founder, Stelios Haji-Ioannou, who along with his family still owns more than 15% of the company. EasyJet had rejected an earlier offer of £6.50 a share, saying it substantially undervalued the business. The first bid was worth £5.60 a share.
The company's shares closed at £5.58 on Friday, giving it a market value of £4.2bn. The last time shares traded above £6.90 was in early 2022 during the coronavirus pandemic. Some shareholders had urged chair Stephen Hester to push for a price above £7.
Vulnerability and Competition
EasyJet was deemed vulnerable to a takeover this year after two profit warnings in the spring and a difficult macroeconomic backdrop caused by fuel price surges linked to the US-Israeli war on Iran. CEO Kenton Jarvis reported falling bookings in March due to the conflict. The airline also faces stiff competition from Ryanair, Wizz Air, and Jet2 in the low-cost market.
Castlelake's Plans
Castlelake, based in Minneapolis, is a US private equity investor founded by banker Rory O'Neill. The company specialises in asset-based lending, including leasing planes to airlines. Analysts suggest easyJet's fleet could complement its leasing business, and the holidays arm might be spun off. Castlelake has previously held a stake in Scandinavian airline SAS, which it is selling to Air France-KLM.
EasyJet, headquartered at Luton airport, operates from 164 airports in 38 countries and employs 19,000 people. The companies did not disclose plans for workers, but Castlelake stated it "has 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 for the benefit of all stakeholders if the transaction proceeds to completion."
Castlelake also said it supports easyJet's plans to buy newer planes to modernise its fleet and cut fuel costs. The firm has indicated it will set up a European holding company controlled by EU nationals to comply with EU airline restrictions. Previous bids named Peter Bellew, former Malaysia Airlines CEO and ex-COO at easyJet, Riyadh Air, and Ryanair, and Mark Breen, CEO of Oneiros Aerospace, as controlling directors. Canadian-American investor Brookfield Asset Management was also part of earlier bids.
Evercore advised easyJet on negotiations, while Goldman Sachs advised Castlelake. Castlelake has until 5pm on 3 August to make a firm offer or walk away.
