EasyJet backs £5.2bn Castlelake bid facing EU hurdle
EasyJet has agreed in principle to a £5.2bn takeover by US firm Castlelake, a deal that would reshape European low-cost aviation but hinges on complex EU ownership rules.
EasyJet has reached an agreement in principle with US investment firm Castlelake over a potential takeover worth around £5.2bn, or £6.90 per share. The Luton-based carrier’s board stated the financial terms are at a level it would be minded to recommend to shareholders. This marks a reversal after EasyJet previously rejected four bids and accused the firm of trying to buy it "on the cheap".
The bid targets a network of roughly 1,200 routes across 35 European countries that employs more than 19,000 people. Former aviation executive John Strickland noted that beyond being a "profitable, successful airline" with "high brand recognition", the carrier holds "a substantial fleet of aircraft, numbering over 350 planes".
He highlighted that EasyJet has "a massive order book – aircraft slots on production lines are hard to get your hands on". Strickland also pointed to "a very strong slot position at a number of large, congested airports around Europe, including Gatwick and Paris Charles de Gaulle", where the most popular slots can be worth tens of millions of pounds.
Securing these assets will require Castlelake to navigate a strict regulatory barrier. European Union regulations dictate that EasyJet must remain majority-owned by EU citizens. To satisfy this rule, Castlelake has proposed partnering with two EU nationals: former EasyJet and Ryanair chief operating officer Peter Bellew, and aerospace consultant Mark Breen, who has held senior roles at several airlines in the Middle East. They would hold majority control of the airline through an EU-based company.
Castlelake, which manages $36bn in assets and currently holds a 2.14% stake in EasyJet, has until 17:00 BST on 3 August to announce a firm intention to make an offer. EasyJet’s share price had fallen by more than 30% in the year before the first bid emerged in June, closing on Friday at £5.58. The airline had partly blamed this temporary depression on the impact of the US-Israel war with Iran on the travel sector.
If a formal offer materialises, it will face a shareholder vote. Castlelake has "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". Strickland said he did not expect the US firm to slim down the carrier, suggesting the focus is on capitalising on its existing network rather than breaking it apart.
