EasyJet reaches agreement in principle over £5.2bn Castlelake takeover

EasyJet has reached an agreement in principle with US investment firm Castlelake over a potential takeover offer valuing the airline at approximately £5.2 billion.

The Luton-based low-cost carrier confirmed on Sunday (July 5) that its board of directors had reached an agreement on the £6.90-per-share proposal put forward on Jul 4, reports the BBC.

The airline had previously rejected four separate offers from Castlelake – worth £5.60, £6, £6.25, and £6.50 a share – having previously accused the firm of trying to buy the company “on the cheap”.

Castlelake currently holds a 2.14% stake in easyJet through the funds it manages.

The board stated that the financial terms of the new proposal “are at a value that the Board would be minded to recommend to easyJet shareholders” should a firm offer materialise.

Castlelake has until 5pm on August 3 to either announce a firm intention to make an offer or walk away. Any final offer would remain subject to a shareholder vote.

The agreement in principle does not guarantee a completed transaction, as Castlelake must still secure necessary regulatory clearances.

A key hurdle involves EU ownership rules, which dictate that European airlines must remain at least 51% European-owned. While Castlelake is a US-based firm, it has previously indicated it would outline measures to comply with these restrictions.

EasyJet’s stock closed at £5.58 on Friday, having fallen by more than 30% over the past year prior to the emergence of the initial June bids.

The airline previously noted that its share price had been “temporarily depressed”, partly due to the wider impact of geopolitical conflicts on the travel sector.

In a joint statement on Sunday, Castlelake, which manages $36 billion (£27.3 billion) in assets, said it “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 for the benefit of all stakeholders if the transaction proceeds to completion”.

Castlelake also confirmed that it would agree to a ’best endeavours’ commitment "in any cooperation agreement to obtain any regulatory clearances and approvals required to consummate the transaction".