EasyJet backs $7.3bn Castlelake takeover

Sweetened bid wins board support despite regulatory and shareholder hurdles.

EasyJet has agreed in principle to support a GBP5.5 billion ($7.3 billion) takeover proposal from U.S. investment firm Castlelake, marking a significant breakthrough after the airline rejected several earlier approaches.

According to a Monday press release, the revised offer values EasyJet at GBP6.90 per share, a 73% premium to the airline's closing share price on May 29, before Castlelake disclosed its interest.

The board said it would be minded to recommend the proposal to shareholders if Castlelake submits a firm offer by the August 3 deadline under UK takeover rules.

The agreement follows weeks of negotiations during which EasyJet dismissed earlier bids as undervaluing the business.

However, the improved proposal comes as airlines continue to face pressure from higher fuel costs and softer profitability, while London's relatively low market valuations continue to attract private equity interest.

For shareholders, the revised offer provides an opportunity to crystallize value at a substantial premium despite the market’s caution around the deal’s completion.

Although EasyJet shares rose to four-year highs following the announcement, they continued to trade below the offer price, reflecting uncertainty over regulatory approval, financing, and execution.

A key obstacle remains EU ownership rules, which require airlines operating within the bloc to be majority owned and effectively controlled by EU nationals.

Castlelake has proposed a structure under which it would own 49% of the acquisition vehicle, with the remaining stake held by former EasyJet executive Peter Bellew and aviation executive Mark Breen.

Analysts, however, continue to debate whether the arrangement will satisfy regulators.

Investors will also be watching for the possibility of a competing bid and whether EasyJet's largest shareholders support the transaction.

Founder Stelios Haji-Ioannou and his family remain the airline's largest investors with a stake of around 15%, while analysts have suggested the proposed valuation could still leave room for rival interest.

The move comes amid a broader dealmaking revival, with estimates that worldwide M&A activity reaching $2 trillion in the first half of 2026, a 41% year-over-year increase. M&A-related shareholder activism is also accelerating, with the number of U.S. companies facing M&A-related activist demands up 50% in the first quarter.

With Castlelake now required to submit a formal offer by August 3, attention will shift to regulatory approvals, shareholder backing and whether the proposed structure can clear EU ownership requirements.

The outcome could determine whether one of Europe's largest low-cost airlines becomes the latest London-listed company to leave the public markets.

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