The UK budget airline industry has been shaken as EasyJet investors demand a substantial increase of at least £600 million from US private equity firm Castlelake, should a takeover bid proceed. Specifically, shareholders are seeking a minimum price of £7 per share, valuing the FTSE 250 company at approximately £5.3 billion – a notable hike from Castlelake's previous offer of £6.25 per share (£4.7 billion valuation).
This stance follows EasyJet's rejection of three prior approaches from Castlelake, with investors and industry analysts alike citing concerns that the bids fail to accurately reflect the company's underlying strength and future potential. EasyJet's board has maintained a firm stance against Castlelake's proposals, accusing the bidder of attempting to secure the airline "on the cheap". The regulatory requirement for EasyJet to maintain majority EU ownership adds an extra layer of complexity to any potential deal, limiting involvement from certain partners such as British Airways owner IAG.
Despite Castlelake's latest public offer, EasyJet shares saw a dip of one per cent on Tuesday's market open, trading at £5.13. Analysts and investors suggest that EasyJet's assets – including its extensive fleet and holidays division – justify a valuation closer to the £7 per share mark.
Russ Mould, Investment Director at AJ Bell, noted that EasyJet's current valuation appears attractive compared to its European competitors, making it a logical target for a bidder like Castlelake. However, he also highlighted that EasyJet shareholders, including founder Sir Stelios Haji-Ioannou, would likely be hesitant to sell without a significant premium above the undisturbed share price.
EasyJet is reportedly planning to meet with shareholders to gauge their reactions to Castlelake's latest public offer. While a statement from EasyJet declined to comment on the ongoing situation, the airline's investors remain resolute in their demands for a substantial increase in value – at least £600 million more than Castlelake's previous offer.