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FinanceUS private equity firm Castlelake to acquire easyJet for £5.5 billion
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British budget airline easyJet has agreed in principle to be acquired by US private equity firm Castlelake for approximately £5.5 billion, or £6.90 per share in cash, after rejecting four previous offers as 'highly opportunistic'. The deal, which still faces regulatory hurdles regarding EU airline ownership rules, would allow current shareholders to remain invested. The acquisition has sparked concern among City analysts, with Kathleen Brooks of XTB calling it 'symbolic' of a 'massive For Sale sign above UK corporates' due to persistently cheap share prices. Minneapolis-based Castlelake, an experienced aviation financier, promises business as usual at the Luton-based carrier, which is reportedly on track to make £1 billion in annual profits. The outcome remains uncertain as easyJet's founder Stelios Haji-Ioannou, who owns 15% of the company, has not yet indicated his position. European rival airlines saw their shares rise on the news, relieved that easyJet is not being acquired by a more expansionist competitor.
Source report
After rejecting four previous offers as "highly opportunistic," easyJet has agreed in principle to be acquired by US private equity investor Castlelake, according to Kate Duffy on Bloomberg.
Following a month-long negotiation, the British budget airline has accepted an improved offer of £6.90 per share in cash — valuing the deal at approximately £5.5 billion — subject to navigating strict EU regulations on airline ownership.
No Longer 'No-Frills'
Shares in easyJet — a once-groundbreaking "no-frills" venture founded by Stelios Haji-Ioannou and floated in 2000 — jumped on the news, reported Gwyn Topham in The Guardian. The rise was partly attributed to the fact that the latest offer allows current shareholders to remain invested under Castlelake's ownership, "rather than being forced to divest when it delists."
However, the mood among some City analysts was somber. Kathleen Brooks of brokerage XTB noted that the potential loss of "an iconic British aviation name" was "symbolic" of the "massive For Sale sign above UK corporates" due to persistently low share prices — and could encourage foreign buyers to target more FTSE-listed firms.
Destination 'Largely the Same'
Minneapolis-based Castlelake, an experienced aviation financier and lessor, is no newcomer to the sector. The firm has promised business as usual at easyJet, according to Robert Lea in The Times. Despite recent challenges — including a stock price battered by the Iran conflict — the Luton-based carrier is reportedly on track to generate £1 billion in annual profits.
Investors remain cautious about pricing in a definitive sale, said Lex in the Financial Times. One key "unknown" is the stance of "the orange airline's forthright founder and 15% owner," Haji-Ioannou.
Meanwhile, shares in European rivals rose. The nightmare scenario for competitors was that easyJet would fall to a more aggressive, expansionist buyer. The fact that its "destination remains largely the same" under Castlelake offers some reassurance.
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