EasyJet has labelled a potential £3bn takeover bid by US investment firm Castlelake as 'highly opportunistic', as the airline's shares surged to their highest level in three months following news of the interest.
Castlelake's Offer
Castlelake, a private credit firm based in Minneapolis, announced on Friday it was considering a takeover offer for the airline. On Monday, it revealed it had already acquired a 2.14% stake and that its offer would value easyJet at a minimum of 403p per share, totalling around £3bn.
However, easyJet criticised the potential buyer, citing 'highly opportunistic timing' as the airline's share price was 'temporarily depressed due to the current situation in the Middle East and its impact on customer confidence and jet fuel prices'.
Share Performance
Before the takeover news emerged, easyJet shares had lost about a fifth of their value since the start of the year. However, on Monday, shares jumped as much as 12% in early trading, reaching 444.7p—well above the minimum offer level and the highest since 2 March, valuing the company at approximately £3.4bn. The gains later eased to around 10%.
The company stated its board remains confident in its strategy, given its cash position and profit outlook.
Regulatory Challenges
Under City takeover rules, Castlelake, which manages $36bn (£27bn) in assets, has until 5pm on 26 June to announce whether it will make a formal offer. EasyJet said it would 'consider any proposal, should one be made' but noted 'considerable regulatory, financial and other execution challenges associated with a potential takeover'.
EU regulations require European airlines to be majority-owned by investors within the region. Ruairi Cullinane, an analyst at RBC Capital Markets, noted that this 'could, at the very least, complicate a takeover of easyJet by Castlelake, if acting alone'.
Previous Interest
This is not the first time the FTSE 100 airline has attracted potential buyers. In October, reports emerged that Swiss-based shipping company MSC was considering a takeover. In 2021, easyJet also rejected an approach from rival Wizz Air.
EasyJet, headquartered in Luton with over 16,000 employees worldwide, is one of Europe's three largest low-cost airlines, behind Ryanair and ahead of Wizz Air. The company was founded by billionaire Stelios Haji-Ioannou, who remains the largest single shareholder with a stake of about 15%. He declined to comment on Monday.
Castlelake's Presence in Aviation
Castlelake already has a strong presence in the airline industry, having provided loans to Scandinavian airline SAS and Virgin Atlantic Airways. Susannah Streeter, chief investment strategist at Wealth Club, said: 'Castlelake clearly believes the market may be underestimating easyJet's longer-term earnings potential and the resilience of its network.'
Impact on London Stock Market
A takeover of easyJet would mark another significant loss for London's struggling stock market, which has seen a series of high-profile exits in recent years, including Ashtead, Flutter Entertainment, and CRH. Streeter added: 'This is fresh evidence that the British markets are increasingly becoming a hunting ground for sophisticated institutional investors, with UK-listed stocks continuing to trade at lower valuations than other markets.'
