EasyJet's boardroom drama has taken an unexpected turn as the budget airline engages in talks with US investment firm Castlelake, despite rejecting its £4.9 billion takeover bid. The proposed deal, which values EasyJet at approximately 650p per share, was unanimously rejected by the company's board earlier this month due to concerns over undervaluation and deliverability.
However, recent statements from EasyJet suggest a shift in its stance. By granting Castlelake access to specific financial details, the airline appears willing to engage further with the US firm, potentially paving the way for a revised offer that better reflects EasyJet's value, future prospects, and shareholder interests. This development has sparked market optimism, with EasyJet's share price surging 6% on Thursday morning to reach 575p.
Castlelake, which specialises in aircraft leasing and aviation finance, already holds a minor stake in EasyJet and has until 5pm on 5 July to either enhance its offer or withdraw from the process. The investment firm's latest bid of 650p per share represents an increase from its previous offer of 625p per share and a significant jump from its initial proposal of 403p per share made on 1 June.
A key aspect of any potential takeover involves maintaining EasyJet's EU operating licence, which requires European carriers to be majority EU-owned and controlled. Castlelake's proposed bidding vehicle addresses this by suggesting a structure where 49% would be owned by the firm and its co-investors, including Brookfield Asset Management, with the remaining 51% held by two EU nationals, Peter Bellew and Mark Breen.
Market analysts are viewing this development as a positive sign. Chris Beauchamp, chief market analyst at IG, noted that the extension of the deadline suggests a deal is increasingly likely, with investors anticipating a sweetened offer. Castlelake's £28 billion in assets under management also lends credibility to its bid, with the investment firm poised to make a more compelling proposal if it chooses to do so.