EasyJet's shares surged by over 11% on Monday morning following the announcement of an agreement in principle with US investment firm Castlelake for a potential £5.2 billion takeover. The proposed deal values the UK-based low-cost airline at £6.90 per share, a significant increase from previous bids.
The Luton-headquartered carrier had previously dismissed four rejected offers from Castlelake, which manages funds holding around 2.14% of EasyJet's shares. These earlier proposals ranged between £5.60 and £6.50 per share, with EasyJet accusing the US firm of undervaluing its assets. The latest agreement, reached on Sunday after a proposal made on 4 July, marks a shift in EasyJet's stance.
While an agreement is in place, Castlelake still needs to secure regulatory approvals and clearances before a transaction can proceed. A key hurdle lies with EU rules requiring European airlines to be at least 51% owned by a European entity, which Castlelake will need to address as a US firm. The investment firm has until 17:00 BST on 3 August to either formally announce its intention to make an offer or state that it does not intend to do so.
If a firm offer is made, EasyJet's shareholders would vote on the proposal. The airline's board indicated on Sunday that they are 'minded to recommend' the deal if a firm offer materialises. With over 19,000 employees and approximately 1,200 routes across 35 European countries, EasyJet remains one of Europe's largest airlines.
EasyJet's share price had declined by over 30% in the year preceding news of the initial bid, closing at £5.58 on Friday. Castlelake has expressed its intention to support EasyJet's growth and transformation into a more resilient European airline, with assets under management totalling $36 billion (approximately £27.3 billion).
The potential takeover introduces uncertainty for UK travellers considering flights with EasyJet, though immediate operational changes are unlikely. The airline remains a popular choice for British tourists seeking affordable travel to destinations like Spain, Portugal, Greece, and France.