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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 rather than being forced to sell upon delisting. 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 low share valuations. Minneapolis-based Castlelake, an experienced aviation financier, has promised business as usual at the Luton-based carrier, which is reportedly on track to make £1 billion in annual profits. The deal's outcome remains uncertain pending the view of easyJet's founder Stelios Haji-Ioannou, who owns 15% of the company. European rival airlines saw their shares rise on the news, relieved that easyJet's destination remains largely the same under Castlelake rather than falling to a more expansionist buyer.
Source report
After rejecting four previous offers as "highly opportunistic," easyJet has agreed 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 — 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 — rose on the news, reported Gwyn Topham in The Guardian. The increase was partly driven by 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, some City analysts expressed concern. 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 cheap share prices — and could encourage further foreign acquisitions of FTSE-listed firms.
Destination 'Largely the Same'
Minneapolis-based Castlelake, an experienced aviation financier and leaser, 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 the airline's stock being hit 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. However, shares in European rivals rose. The industry's worst-case scenario was that easyJet would fall to a more aggressive, expansionist buyer. That its "destination remains largely the same" under Castlelake offers some reassurance to competitors.
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