EasyJet rejects $6.2bn Castlelake bid

The U.S. private credit group makes a public bid as regulatory deadlines near.

EasyJet has rejected a third takeover proposal from U.S. alternative investment firm Castlelake, setting the stage for a potential showdown between the airline's board and shareholders ahead of a regulatory deadline later this week.

Castlelake submitted a GBP4.7bn ($6.2 billion) proposal over the weekend valuing EasyJet at GBP6.25 per share after what it described as repeated refusals by the company's board to engage with its approach.

The offer represents a premium of approximately 59% to EasyJet's share price before Castlelake's interest became public.

"Following the rejection of three proposals by the easyJet Board, and given its unwillingness to engage meaningfully, Castlelake is announcing this third proposal to enable easyJet shareholders to consider its merits and provide their views," the investor said in a statement.

The move shifts the battle into the public domain and places increasing pressure on EasyJet's board to justify its rejection of the offer.

EasyJet had previously said the proposal fails to reflect its “medium-term prospects, its strong balance sheet and capital structure" and argued that the bid opportunistically targets the company during a period of share price weakness.

Beyond valuation, the board also raised concerns about the proposed ownership structure.

Castlelake has sought to address questions over regulatory compliance and stewardship by outlining plans to maintain EasyJet as a privately held airline while respecting EU ownership requirements.

The investor has partnered with former Ryanair executive Peter Bellew and former Arajet chief executive Mark Breen as part of its proposed governance framework and said a small group of co-investors would participate in financing the acquisition.

EasyJet, however, described the ownership structure as opaque and questioned the deliverability of the proposal, citing concerns over leverage and deal conditionality.

The news comes a little over a week after Swedish private equity giant EQT agreed to acquire UK product testing company Intertek in a GBP10.9 billion ($14.5 billion) deal, marking one of the largest take-private transactions in the UK market this year.

Ultimately, with the UK's takeover rules requiring Castlelake to either make a firm offer or walk away by Friday, questions remain on whether the board is protecting long-term value or rejecting a premium offer that may not return.

Like this article? Sign up for our free newsletter.