EasyJet rejects £4.7bn Castlelake takeover proposal as deadline looms
The low-cost carrier has rebuffed a 625p-a-share all-cash approach from US investment firm Castlelake, which now has until 26 June to decide whether to make a firm offer.
Rajan Mehta
Writer ·
EasyJet has rejected a £4.7bn takeover proposal from the US investment firm Castlelake, setting up a tense deadline week in which the airline's shareholders will watch for any sign of a formal bid.
Castlelake went public with its all-cash proposal of 625p a share after the easyJet board turned it down. It marked the firm's third approach, following earlier soundings reported at 560p and 600p, suggesting a determined pursuer rather than an opportunistic one-off.
Under UK takeover rules, Castlelake now faces a hard deadline of 5pm on 26 June to declare whether it intends to make a firm offer or walk away.
The board's case
EasyJet's directors argue that the proposal undervalues the company and is opportunistic, pointing to the airline's recovery and its standing as one of Europe's largest low-cost carriers. The company is headquartered in Luton and employs more than 16,000 people worldwide.
Their pitch to investors is, in essence, that the business is worth more left to run its own course as travel demand continues to firm up than it is for a premium banked today.
A regulatory complication
Any deal carries an awkward structural wrinkle. European airline ownership rules require majority EU ownership and control, a condition that has continued to apply to easyJet since Brexit. Castlelake says it has lined up European investors to satisfy that requirement.
EasyJet, however, has raised questions about the proposed structure, the level of leverage involved and the risk that such a deal could prove difficult to execute in practice.
A familiar dilemma
For shareholders, the situation poses a recurring choice: accept a premium now, or back management's argument that patience will be rewarded. EasyJet has rebuffed takeover interest before, including from Wizz Air, and has periodically been linked with other potential suitors.
The next move belongs to Castlelake. A firm bid would sharply increase the pressure on easyJet's board, while a decision to step back would leave the airline with the task of proving that independence can deliver more value than the cash now on the table.
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