Takeover Proposal Escalates as easyJet Rejects Third Offer
Minneapolis-based investment firm Castlelake has publicly disclosed its latest takeover proposal for European budget carrier easyJet, valued at approximately £4.7 billion. The move follows the rejection of three successive offers by the airline’s board, marking a significant escalation in the potential acquisition process.
Castlelake, which manages roughly $36 billion in assets, confirmed that the latest all-cash proposal of 625p per share was rejected on Sunday. The firm previously submitted offers at 560p and 600p. By making the bid public, Castlelake intends to allow easyJet shareholders to evaluate the proposal directly before the upcoming regulatory deadline of 5:00 PM on June 26, as dictated by City takeover rules.
Dispute Over Valuation and Strategy
The easyJet board has firmly rejected the latest approach, characterizing the bid as an “opportunistic attempt to acquire easyJet on the cheap.” In a formal statement, the airline argued that the proposal fails to reflect the company’s long-term prospects and relies on share prices that have been temporarily depressed by regional conflicts in the Middle East and short-term earnings volatility.
Market reaction to the takeover speculation has been notable. Shares in easyJet have risen approximately 36% over the past month, trading up 2% to 515p in early Monday trading, despite the board’s resistance.
Navigating Ownership Regulations
A central challenge in any acquisition of a European airline is adherence to EU ownership and control regulations, which require that carriers operating within the bloc be majority-owned by EU nationals. This requirement persists for easyJet despite the United Kingdom’s departure from the European Union.
To address these regulatory hurdles, Castlelake has announced a partnership with two industry figures:
- Peter Bellew: A former executive at Ryanair, easyJet, and Malaysia Airlines, currently operating Dooks Capital.
- Mark Breen: Chief executive of Dublin-based Oneiros Aerospace.
Castlelake stated that these partners would participate through an EU-based company structure designed to ensure full compliance with regulatory ownership requirements. However, the easyJet board has described this proposed structure as “opaque.”
Context of Recent Airline Consolidation
This development follows a history of interest in the Luton-based carrier. In 2021, easyJet rejected a takeover approach from rival budget airline Wizz Air. Additionally, reports surfaced in October suggesting that Swiss-headquartered shipping giant MSC had considered a bid for the company.
Castlelake, led by founder Rory O’Neill, has a significant track record in the aviation sector. The firm was involved in the bailout of Scandinavian Airlines (SAS) before selling its stake to Air France-KLM and has previously engaged in discussions regarding the acquisition of the now-bankrupt US carrier Spirit Airlines.
As the June 26 deadline approaches, the focus remains on whether Castlelake will formally pursue a hostile bid or if the easyJet board will receive alternative proposals to address shareholder concerns regarding the company’s current market valuation.
