European budget airline easyJet has reached an agreement “in principle” to be acquired by US investment firm Castlelake in a £5.5 billion deal.
Having rejected four previous bids from Castlelake, easyJet’s board said on Sunday (5 July) that it had “reached an agreement in principle on the key financial terms” following an improved offer from Castlelake of £6.90 per share — up from its previous offer in late June of £6.50 per share.
In a statement to investors, easyJet said that its board “would be minded” to recommend Castlelake’s latest offer to shareholders if the investment firm goes ahead with the takeover.
“In discussions between the parties, Castlelake 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,” added the airline.
“Castlelake is supportive of easyJet's fleet modernisation programme, which it regards as central to the company's long-term competitiveness, efficiency and sustainability objectives.”
The proposed deal could face significant regulatory and approval challenges. Castlelake is proposing a bidding vehicle for easyJet that would be 49 per cent owned by Castlelake, with the other 51 per cent controlled by EU nationals, including experienced airline executives Peter Bellew and Mark Breen. This structure would be necessary to comply with EU rules on the majority ownership of airlines.
Castlelake’s fifth proposal for easyJet came as its takeover bid faced a so-called “put up or shut up deadline” on 5 July, as set down by the UK’s Panel on Takeovers and Mergers, which regulates takeovers of UK listed companies. This deadline for a formal bid to be made for easyJet has now been extended until 5pm on 3 August, following a request by easyJet’s board.
EasyJet added there was “no certainty that any firm offer will be made” by Castlelake and advised its shareholders to “take no action” at this stage.