EasyJet Rejects $6.26 Billion Takeover Bid from Castlelake

Redacción - Aviación al Día

1 day ago

British low-cost carrier easyJet has categorically rejected a public takeover bid from US investment firm Castlelake, valued at £4.74 billion ($6.26 billion). The airline’s board of directors labeled the offer “opportunistic” and stated that it does not represent the best interests of its shareholders.

Bidding History and Pressure on the Board

The proposal disclosed by Castlelake—a Minneapolis-based firm managing approximately $38 billion in assets—set a price of £6.25 per share, formally submitted on June 20. The global investor decided to take the proposal public so that the airline’s shareholders could evaluate its merits ahead of a June 26 deadline.

This move marks the financial firm’s third acquisition attempt, following the revelation that two previous bids were rejected:

June 12: First offer at £5.60 per share.
June 17: Second offer at £6.00 per share.
June 20: Third and final offer at £6.25 per share.

The price proposed in this latest attempt represents a 57% premium over easyJet’s closing price on May 29, the date Castlelake first made its initial interest in the airline public. Following the announcement, easyJet shares rallied on the London Stock Exchange, gaining up to 5.3% to reach £5.30—their highest level in nearly a year.

→ EasyJet Boosts Winter Network with 13 New Routes from Eight UK Airports

Market Valuation and Strategic Challenges

EasyJet’s leadership contends that Castlelake is attempting to buy the company “on the cheap,” capitalizing on current conditions in the UK market. The London Stock Exchange has recently seen a trend of undervalued companies compared to US and other international markets, sparking increased interest from foreign buyers.

Despite financial pressures from the current macroeconomic environment—marked by the impact of the conflict in Iran and a slowdown in airline booking momentum—easyJet reaffirmed that its focus remains firmly on securing its medium-term targets and driving growth in its package holiday division, easyJet holidays.

Meanwhile, the airline’s founder and current largest investor, Stelios Haji-Ioannou, who holds a stake of nearly 15% alongside his family, declined to comment. Haji-Ioannou, who stepped down from the board of directors in 2010, is well-known in the industry for his frequent public disagreements with management regarding fleet expansion plans.

Regulatory Maze of EU Ownership Laws

One of the most complex aspects of the transaction lies in European Union (EU) ownership requirements. Under the bloc’s regulatory framework, airlines holding a European operating license must be effectively controlled and majority-owned (more than 50%) by EU nationals.

To bypass this hurdle, Castlelake structured an ownership model where the US fund would control 49% of the bidding vehicle, leaving the remaining 51% in the hands of European citizens and other undisclosed strategic investors. The consortium has secured the backing of two prominent aviation industry figures serving as EU partners:

Peter Bellew: An EU citizen and former CEO of Malaysia Airlines. Bellew is a familiar face at the company, having served as easyJet’s Chief Operating Officer (COO) between 2020 and 2022, following a controversial departure from Ryanair that sparked a non-compete legal dispute that was ultimately dismissed.
Mark Breen: An EU aviation executive and current CEO of Dublin-based Oneiros Aerospace, with prior experience at Oman Air.

A Structure Labeled “Opaque”

Despite deploying a team of advisors and securing financial backing from Goldman Sachs for both equity and debt commitments, easyJet’s board dismissed the regulatory compliance plan presented by the bidders. The low-cost carrier characterized the proposed corporate structure as “opaque,” asserting that it failed to provide a solid foundation for a formal evaluation of the bid.

Financial analysts, such as Dudley Shanley of Goodbody Stockbrokers, suggest that the partial stock-swap alternative included in Castlelake’s offer might be specifically designed to entice founder Stelios Haji-Ioannou. However, Shanley warned that easyJet investors could be disappointed by the lack of an established European aviation partner backing the deal.

Major carriers like Air France-KLM and International Airlines Group (IAG)—the parent company of British Airways and Iberia—have historically been rumored as potential suitors for easyJet. However, strict EU antitrust and competition laws make consolidation on this scale highly difficult. While Air France-KLM management suggested two weeks ago that they would look at a potential deal if approached, the Franco-Dutch airline group is not part of Castlelake’s current proposal.

With the unanimous rejection by the easyJet board, the ball is now in the shareholders’ court. They have until June 26 to voice their positions and decide whether to pressure management into entering formal negotiations or to back the airline’s independent growth strategy.