EasyJet’s board has agreed in principle to a £5.5bn takeover bid from US private investment firm Castlelake at 690p per share, a move that Nils Pratley argues represents a premature surrender. The board, led by chair Sir Stephen Hester, rejected three earlier offers as undervaluations before accepting a fourth, which Pratley calls timid.
EasyJet's Profitability Target Remains Intact
EasyJet had improved pre-tax profits by 46% to £665m in the two years to September 2025, with a solid balance sheet and a plan to hit £1bn-plus profitability. The Iran conflict may have delayed this target by a year, but the board confirmed the target was intact. Pratley notes that the holidays business hit its £250m profit target early, and fleet upgrades to fuel-efficient A320 and A321 aircraft should yield further improvements.
Assets and Operational Potential Undervalued
EasyJet owns 208 aircraft outright, has orders amid constrained supply from Airbus and Boeing, and holds valuable landing slots at Gatwick. City analysts estimate the company is worth 600p-650p on asset value alone. Pratley points out that shares traded at 586p just 13 months ago, and achieving the £1bn profit target could push the price to 700p or beyond. The board's earlier branding of the 625p offer as 'on the cheap' contrasts with accepting a 6% bump to 690p.
Shareholder Pressure and Regulatory Risks
Pratley questions whether Hester faced undue shareholder pressure, but insists the board's job is to form its own view. Castlelake faces regulatory hurdles in bypassing EU ownership rules, reflected in the current market price of around 600p. Pratley urges the board to aim higher on price grounds, stating, 'You only get to sell once: at least go out in style.'
