EasyJet Rejects Fourth Takeover Offer, Opens Talks
EasyJet has opened talks with US investment firm Castlelake, despite rejecting a fourth takeover offer worth £4.9bn. The British budget carrier unanimously turned down the latest proposal of 650p a share, stating it still "substantially" undervalued the company and raised "significant questions of deliverability." However, in a statement on Thursday, EasyJet indicated a slight thaw in its stance, agreeing to provide limited commercial information to Castlelake in hopes of receiving a more attractive offer.
Board Hopes for Improved Proposal
The airline's board believes that granting Castlelake access to limited commercial information might produce a more attractive proposal that better reflects the value of EasyJet and its prospects, as well as the interests of shareholders. However, the board remains concerned about the ownership structure and deliverability of any offer from Castlelake, and the time it will take. Castlelake has until 5pm on 5 July to improve its offer or walk away.
Share Price Rises on News
EasyJet's share price rose 6% on Thursday morning to 575p, as investors reacted positively to the possibility of a sweetened deal. Castlelake's latest proposal of 650p per share was higher than its previous 625p offer, which EasyJet had described as "highly opportunistic," and up from 403p in its first proposal made on 1 June.
Castlelake's Background and Partners
Castlelake, based in Minneapolis, manages $38bn in assets and is known for investing in aircraft leasing and aviation finance. It already owns a small stake in EasyJet. To maintain an EU operating licence, European carriers must be majority EU-owned and controlled under EU rules. Castlelake has added New York-based asset manager Brookfield Asset Management to its bidding vehicle, alongside two Irish aviation executives: Peter Bellew, a former Malaysia Airlines CEO and former COO at EasyJet, and Mark Breen, CEO of Dublin-based Oneiros Aerospace. Under the proposed terms, the bidding vehicle would be 49% owned by Castlelake and co-investors including Brookfield, with the remaining 51% owned by Bellew and Breen, both EU nationals.
Market Analyst Comments
Chris Beauchamp, chief market analyst at IG, said: "EasyJet's board might be making a decent showing of rejecting the Castlelake bid, the deadline extension has been taken as a sign that some kind of deal is doable. Investors clearly expect a sweetened deal to come through, which accounts for the continued strength in the shares over the past week."
