In a significant development in the aviation industry, British budget airline EasyJet has agreed in principle to a £5.2 billion ($6.7 billion) takeover by U.S. private equity firm Castlelake. This decision follows a series of proposals from Castlelake, with the latest offering £6.90 per share, which the EasyJet board is "minded to recommend" to shareholders, provided a firm offer is made by August 3, the deadline set for the deal.
Castlelake, which manages around $38 billion in assets, notably in the aviation sector, had made four previous proposals, all rejected by EasyJet. The airline, known for its distinctive orange and white livery, had initially described Castlelake's interest as "highly opportunistic," considering the timing amid rising fuel costs and decreased demand following the Middle East conflict.
The proposed deal would see Castlelake acquire EasyJet at £6.90 per share, valuing the company at over £5 billion. This offer represents a nearly 24% premium to EasyJet's share price as of Friday’s close. The agreement in principle has given Castlelake limited access to EasyJet’s internal commercial books to finalize its due diligence. Under UK takeover regulations, Castlelake has been granted an extension and now has until August 3 to either announce a firm intention to make an offer or walk away.
If finalized, the deal will take Britain’s largest low-cost carrier private, marking a historic exit from the London FTSE 250 index. The acquisition is expected to reshape Europe’s aviation industry, especially as EasyJet has been a significant player in the low-cost travel sector.
The Haji-Ioannou family, which has long been the largest single shareholder in EasyJet, will lose control of the airline if the transaction completes. The family, led by founder Stelios Haji-Ioannou, owns more than 15% of the company. The proposed deal is subject to due diligence and acceptance by EasyJet’s existing shareholders.
In response to the announcement, EasyJet shares rose 10% in early trading on Monday, reflecting investor optimism about the potential deal. The airline's stock was up 10.9% at £6.18 as of 0720 GMT on Monday.
The proposed acquisition comes at a challenging time for airlines, which are grappling with sharply higher fuel prices and margin pressure linked to the Iran conflict. EasyJet, like many carriers, has faced increased operational costs and fluctuating demand due to geopolitical tensions.
Castlelake has emphasized its respect for EasyJet and its people, along with its intention to support its future growth and transformation to a stronger, more resilient European airline for the benefit of all stakeholders if the transaction proceeds to completion. The firm has also expressed support for EasyJet’s fleet modernization program, which it regards as central to the company's long-term competitiveness, efficiency, and sustainability objectives.
As the deadline approaches, stakeholders are closely monitoring the situation to see if Castlelake will submit a formal bid and whether EasyJet shareholders will approve the proposed takeover. The outcome of this potential acquisition could have significant implications for the future of low-cost air travel in Europe.