Budget airline easyJet has rejected a £4.7 billion bid from investment company Castlelake as an attempt to acquire the company “on the cheap”.
Castlelake, which last month announced that it was considering a bid for easyJet, made an offer of £6.25 per share to purchase the airline on Saturday (20 June), which would be a premium of 24 per cent on easyJet’s share price of £5.04 at the end of Friday (19 June).
EasyJet said in a statement that Castlelake had already made two previous offers of £5.60 and £6.00 per share, which were rejected by the airline’s board as “not being in the best interests of shareholders”.
The airline’s board said it had rejected Castlelake’s latest offer on Sunday (21 June) because it was assessed to be an attempt to acquire easyJet “on the cheap”.
“The board of easyJet carefully considered the third proposal with its advisers and concluded that it is highly opportunistic, delivered against the backdrop of easyJet’s temporarily depressed share price, and still fundamentally undervalues easyJet and its prospects,” added the UK-based airline.
“The premium, multiple and future share price analyses presented by Castlelake are based primarily on Middle East conflict-affected share prices, short-term earnings and analyst reports.”
Castlelake said it has made its third proposal public to enable easyJet shareholders to “consider its merits and provide their views on the third proposal to the easyJet board”.
“Castlelake's ambition is to support easyJet as a stronger, more resilient European airline under European control, respecting easyJet's valuable airline assets and continuing to sustain its network, serve the passengers who depend on them and enable future growth," added the US firm in a statement.
The investment firm has proposed an ownership structure that would see its bidding vehicle for easyJet being 49 per cent owned by Castlelake and 51 per cent by EU nationals to comply with EU rules on the majority ownership of airlines.