US investment firm Castlelake has gone public with a £4.7bn takeover proposal for easyJet, the European low-cost carrier, after three earlier bids were rejected by the airline's board. The all-cash offer of 625p per share values easyJet at just over £4.7bn and was turned down on Sunday, following previous offers at 560p and 600p.
Castlelake's Public Appeal to Shareholders
Castlelake said on Monday it decided to make the bid public so that easyJet shareholders could consider its merits before a takeover deadline on Friday, 26 June. Under City takeover rules, Castlelake has until 5pm that day to announce whether it intends to make a formal offer.
“Castlelake expected that the third proposal would elicit prompt engagement from the easyJet board,” the company stated. “Following the rejection of three proposals by the easyJet Board, and given its unwillingness to engage meaningfully, Castlelake is announcing this third proposal to enable easyJet shareholders to consider its merits and provide their views on the third proposal to the easyJet board.”
Regulatory Compliance and EU Ownership
Castlelake, headquartered in Minneapolis and managing $36bn (£27bn) in assets, has partnered with two investors to meet EU regulations requiring European airlines to be majority-owned by investors within the region. This rule continues to apply to easyJet even after Brexit.
The first partner is Peter Bellew, a former chief operating officer at Riyadh Air, easyJet, and Ryanair, and former CEO of Malaysia Airlines. Bellew currently runs Dooks Capital, a seed investment and advisory firm focused on AI in aviation, founded last September and operating out of Saudi Arabia. The second partner is Mark Breen, CEO of Dublin-based Oneiros Aerospace, whose experience includes working for Oman Air.
“The third proposal includes these EU national partners investing and participating in the proposed acquisition of the company through their ownership and control of an EU company,” Castlelake said. “This EU Partner will hold a controlling shareholding in the overall structure. The EU Partner will at all times be owned and controlled by EU nationals. This proposed structure is consistent with structures adopted by a number of other European airlines that are subject to the same EU ownership rules as the company. Castlelake is confident that this is a clear, deliverable solution to ensure compliance with all applicable regulatory requirements.”
Previous Bids and Market Reaction
Castlelake made its first approach earlier this month, tabling a 403p per share bid valuing easyJet at £3bn. At the time, easyJet criticised the bid, calling it “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.”
Before news of takeover interest emerged, easyJet shares had lost about a fifth of their value since the start of the year. However, the stock has surged by 36% over the last month due to the prospects of a takeover. On Monday morning, shares gained 2% to 515p.
Industry Context and Castlelake's Background
EasyJet, headquartered in Luton and employing more than 16,000 people worldwide, is one of Europe's three biggest low-cost airlines, behind Ryanair, with Wizz Air in third place. In October, reports emerged that Swiss-headquartered shipping company MSC was considering a takeover. In 2021, easyJet rejected an approach from rival Wizz Air.
Castlelake, led by executive chair and founder Rory O'Neill, has assets under management worth $36bn. It entered talks in January with bankrupt US carrier Spirit Airlines over a possible takeover and previously bailed out collapsed Scandinavian Airlines (SAS), later selling its shares to Air France-KLM.
