News agency Reuters revealed that US investor Castlelake made public its £4.74 billion ($6.26 billion) takeover proposal for easyJet last Monday, increasing pressure on the budget airline’s board. The latter quickly dismissed the approach as “opportunistic” and not in shareholders’ best interests.
Minneapolis-based Castlelake, a major aviation investor managing about $38 billion in assets, said its move would give easyJet shareholders the opportunity to assess the proposal’s merits and provide feedback ahead of a June 26 offer deadline.
Castlelake said its £6.25 per share offer was its third proposal, revealing that earlier bids of £5.60 and £6.00 per share submitted on June 12 and June 17 had both been rejected. The latest proposal represents a roughly 57% premium to easyJet’s share price at that time.
Valuation and investor challenges
“The Board believes that the Third Proposal represents an opportunistic attempt to acquire easyJet ‘on the cheap,’” the airline said in a statement.
easyJet said it remains focused on its medium-term targets and the growth of its holidays business, despite headwinds from the Iran war and weaker bookings.
The airline is the latest London-listed company to attract foreign takeover interest, as UK valuations remain lower than those in the U.S. and other markets.
Founder Haji-Ioannou, who left the board in 2010 but remains the largest shareholder with about a 15% stake alongside his family, declined to comment. He has previously clashed publicly with management over expansion plans.
Castlelake said easyJet’s “unwillingness to engage meaningfully” led it to go public with the offer, which also includes a partial equity option for shareholders.
Reuters reported that Castlelake indicated the bid is expected to be fully financed through committed equity and debt, with Goldman Sachs expressing confidence in arranging the required funding.
EU ownership requirements
To maintain its EU operating license, easyJet must remain majority EU-owned and controlled under European rules.
Castlelake said its proposal is supported by former Malaysia Airlines CEO Peter Bellew and senior aviation executive Mark Breen, both EU nationals, in order to comply with those requirements.
The arrangement would bring Bellew back to easyJet, where he served as chief operating officer from 2020 to 2022. He previously left Ryanair to join easyJet. Breen is currently CEO of Dublin-based Oneiros Aerospace and previously worked for Oman Air.
easyJet said the bidding structure would be 49% owned by Castlelake and 51% held by EU nationals and potentially other undisclosed investors.
Bellew did not respond to Reuters’ requests for comment, while Breen referred inquiries back to Castlelake.
The US investor said its proposed structure is consistent with models used by other European airlines to meet regulatory requirements. However, easyJet called the arrangement “opaque” and said it would not form a basis for evaluating the bid.
Air France-KLM and British Airways owner IAG have long been viewed as potential suitors for easyJet, but any takeover would face significant regulatory hurdles under current EU competition rules.
While Air France’s CEO recently said the airline could consider a deal if approached, it is not involved in Castlelake’s current bid.
(Source : Reuters)
