EasyJet has described a potential £3bn takeover bid by a US investment group as 'highly opportunistic' after shares in the airline surged to their highest level in three months on news of the takeover interest.
The US private credit firm Castlelake confirmed on Friday that it was considering a takeover offer for the airline. On Monday, it revealed it had already acquired a 2.14% stake in the business and that its offer would value easyJet at a minimum of 403p per share, equating to approximately £3bn overall.
However, easyJet hit back at the potential buyer, arguing that the timing was 'highly opportunistic' given that 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 the takeover interest emerged, easyJet shares had lost about a fifth of their value since the start of the year. Nonetheless, the company expressed confidence in its strategy, citing its cash position and profit outlook.
Shares in easyJet soared by as much as 12% in early trading on Monday, reaching 444.7p—well above the minimum level of a potential offer by Castlelake and their highest level since 2 March, valuing the company at about £3.4bn. The gains later moderated, with shares closing approximately 10% higher.
Under City takeover rules, Castlelake, which is headquartered in Minneapolis and manages $36bn (£27bn) in assets, has until 5pm on 26 June to announce whether it intends to make a formal offer for easyJet.
EasyJet stated that it would 'consider any proposal, should one be made' but cautioned that there were 'considerable regulatory, financial and other execution challenges associated with a potential takeover'.
Under EU rules, European airlines must be majority-owned by investors within the region. Ruairi Cullinane, an analyst at RBC Capital Markets, noted that these rules 'could, at the very least, complicate a takeover of easyJet by Castlelake, if acting alone'.
This is not the first time the FTSE 100 airline has attracted potential buyers. In October, reports emerged that Swiss-headquartered shipping company MSC was considering a takeover. In 2021, easyJet also rejected an approach from rival airline 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 airline was founded by billionaire Stelios Haji-Ioannou, who remains the largest single shareholder with a stake of about 15%. Haji-Ioannou declined to comment on Monday.
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, commented: 'Castlelake clearly believes the market may be underestimating easyJet's longer-term earnings potential and the resilience of its network.'
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 construction equipment rental company Ashtead, gambling group Flutter Entertainment, and building materials provider 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.'
