easyJet rejects £4.7 billion Castlelake takeover bid

Low-cost carrier easyJet has rejected a £4.74 billion takeover proposal from investment firm Castlelake, describing the offer as “opportunistic” and not in the best interests of shareholders.

Castlelake revealed that it had submitted three separate bids, the latest valuing easyJet at £6.25 per share, following earlier offers of £5.60 and £6.00 that were also rejected. The firm decided to make its proposal public ahead of the 26 June deadline for submitting a formal offer, arguing that shareholders should have the opportunity to assess its merits. The latest proposal represents a premium of around 57% to easyJet’s share price before takeover interest became public in May.

EasyJet’s shares rose more than 5% following the announcement, extending gains to 27% since Castlelake first disclosed its interest. However, the stock remains below the proposed offer price, reflecting investor uncertainty over the bid’s prospects.

A major challenge for any acquisition is compliance with EU ownership rules, which require European airlines to remain majority-owned and controlled by EU nationals. Castlelake has proposed a structure in which it would hold 49% of the airline, with the remaining 51% owned by EU investors, with support from former Malaysia Airlines CEO Peter Bellew and aviation executive Mark Breen. EasyJet has criticised this ownership arrangement as “opaque” and insufficiently detailed.

Analysts suggest that some shareholders, including founder Stelios Haji-Ioannou, who still controls about 15% of the airline with his family, may be attracted to the partial share component of the proposal. Nevertheless, the absence of a strategic airline partner may weaken support for the bid.

Industry observers have long speculated that airline groups such as Air France-KLM or International Airlines Group could be interested in easyJet, although regulatory and competition hurdles would make such a transaction difficult.