easyJet backs Castlelake’s fifth takeover bid

easyJet (EZJ.L) has reached an agreement in principle with US investment firm Castlelake on a cash offer of 690 pence per share, following a series of takeover approaches. This fifth proposal is described as valuing the low-cost carrier at approximately £5.2 billion. The airline’s board has said the financial terms are at a value it would be minded to recommend to shareholders if a firm offer is made.

The latest bid was submitted after weeks of negotiations and several rejected offers, including an opening approach that was near 560 pence per share. Despite the announcement, easyJet (EZJ.L)’s shares traded below the 690 pence bid level, even after a post-announcement increase in the share price.

The agreement currently remains non-binding and conditional. The potential transaction is subject to satisfactory completion of due diligence, the negotiation and signing of definitive transaction documentation, and securing the necessary regulatory approvals. Only if these steps are completed and a firm offer is announced would shareholders be asked to vote on the deal.

Reports note that easyJet had previously turned down four takeover proposals from Castlelake before reaching this in-principle understanding on the fifth bid. The airline has granted limited access to commercial data as part of keeping the discussions active and enabling the investor to conduct further analysis.

A central issue for the potential takeover is compliance with EU airline ownership and control regulations, which require that EU carriers be majority-owned and effectively controlled by EU nationals. To address this, Castlelake has signalled a structure in which it would hold a minority economic stake in the acquisition vehicle.

Under this proposed structure, EU nationals including Peter Bellew and Mark Breen are intended to hold majority control of the bidding vehicle. Regulators will need to assess not only the shareholdings but also whether effective control of easyJet would rest with EU interests under this arrangement. Regulatory clearance on this point remains a material hurdle for the deal.

The 690 pence per share proposal has been variously described as valuing easyJet at about £5.2 billion, with some accounts placing the valuation as high as about £5.5 billion. While the announcement lifted the airline’s share price, the stock continued to trade at a discount to the cash offer level.

The gap between the market price and the bid level suggests investors are still factoring in execution risks, including due diligence outcomes and the possibility that regulatory approvals, particularly around EU ownership and control requirements, could affect the path to completion.