EasyJet Agrees in Principle to Castlelake Takeover Bid

British low-cost airline EasyJet has announced its intention to agree in principle to a takeover offer from US-based investment firm Castlelake. The offer, valued at £6.90 per share, places EasyJet's total market value at approximately £5.23 billion. If the deal is finalized, EasyJet is expected to be taken private and delisted from the London Stock Exchange (LSE).

This development comes after weeks of negotiations and several rejected proposals from Castlelake. The US investment firm's initial bids, starting at £5.60 per share and incrementally rising to £6.00, £6.25, and £6.50, were all rebuffed by EasyJet's board, which deemed them to "substantially undervalue" the company. However, following the fifth and highest offer of £6.90 per share, EasyJet granted Castlelake limited access to commercial information and extended the deadline for a formal bid until August 3, 2026.

EasyJet shares (LON: EZJ) closed at £5.58 on Friday, indicating that Castlelake's latest offer represents a premium of approximately 20% over the market price. The acquisition would result in EasyJet's removal from the FTSE 250 index. Stelios Haji-Ioannou, the airline's founder, and his family, who hold over 15% of EasyJet, stand to gain nearly £800 million from the transaction.

EasyJet has faced significant financial headwinds this year, primarily due to soaring fuel costs, exacerbated by the US-Israeli war on Iran, and softer summer booking trends. The airline also contends with intense competition from rivals such as Ryanair, Wizz Air, and Jet2 across Europe. These macroeconomic and sectoral challenges had positioned EasyJet as a potential takeover target.

Due to UK and European aviation regulations, which mandate that regional airlines must be majority-owned and controlled by regional nationals, US-based Castlelake cannot acquire full ownership of EasyJet. To comply with these rules, Castlelake has partnered with former EasyJet executives Mark Breen and Peter Bellew. Under the proposed structure, Breen and Bellew would acquire a 51% stake, ensuring compliance with EU ownership regulations, while Castlelake and other co-investors would hold the remaining 49%. Castlelake has expressed its commitment to supporting EasyJet's future growth and fleet modernization programs.