EasyJet board prepared to recommend sweetened offer
EasyJet said Sunday that Castlelake, which manages funds that hold a roughly 2.14% stake in the airline, had submitted the improved proposal on July 4. The Minneapolis-based firm has assets under management of $36bn (£27.3bn).
The agreement in principle does not constitute a confirmed deal. Under U.K. takeover rules, Castlelake has until 17:00 BST on Aug. 3 to either announce a firm intention to make an offer or declare that it will not proceed.
Should a formal bid be made, it would need approval from easyJet shareholders. The company’s board said the financial terms “are at a value that the Board would be minded to recommend to easyJet shareholders.”
The Luton-based airline, one of Europe’s largest low-cost carriers, employs more than 19,000 people and operates about 1,200 routes across 35 European countries. EasyJet shares closed Friday at £5.58. Before news of the first takeover approach emerged in June, the stock had fallen more than 30% over the prior year, a decline the company has attributed in part to the impact of the U.S.-Israel war with Iran on travel demand and jet fuel costs.
In announcing the agreement in principle, easyJet said Castlelake had “emphasised its tremendous respect for easyJet and its people, along with its intention to support its future growth and transformation to a stronger, more resilient European airline.”
The deal faces a significant regulatory hurdle: European Union rules require easyJet to be at least 51% owned by European entities. Castlelake, as a U.S. firm, has previously outlined a plan to comply with the requirement, though the mechanism has not been publicly detailed.
The provisional agreement comes after more than a month of negotiations in which easyJet characterized earlier approaches as opportunistic. The initial reported offer in early June was worth about £3bn. The company formally rejected four successive bids — at £6.50, £5.60, £6, and £6.25 per share — before Castlelake raised its proposal to £6.90.