easyJet Agrees in Principle to $7.3 Billion Castlelake Takeover Bid, Deal Faces EU Ownership Hurdles

Post by : Saif

British low-cost airline easyJet has agreed in principle to a revised takeover proposal from U.S.-based investment firm Castlelake, valuing the airline at £5.5 billion ($7.3 billion). If completed, the deal would take one of Europe's largest budget airlines private and mark one of the biggest aviation acquisitions of 2026.

According to Reuters, Castlelake has offered £6.90 per share, a significant increase from its earlier proposal. The easyJet board said the latest offer is at a value that it would be prepared to recommend to shareholders, provided Castlelake submits a formal offer by August 3.

New Offer Represents a 73% Premium

The revised bid values easyJet at approximately £5.5 billion on a fully diluted basis and represents a 73% premium over the airline's closing share price on May 29, when Castlelake first disclosed its interest.

EasyJet had previously rejected Castlelake's £4.93 billion proposal in June, describing the approach as opportunistic. However, the airline allowed the investment firm limited access to its commercial information to continue negotiations.

The improved offer reflects Castlelake's stronger commitment to securing the deal after weeks of discussions.

Potential Shake-Up for Europe's Aviation Industry

If the acquisition moves forward, easyJet would become a privately owned company after more than three decades as a publicly traded airline.

The proposed takeover comes at a challenging time for airlines across Europe, with carriers facing rising fuel costs, pressure on profits, and uncertainty linked to the recent Iran conflict.

EasyJet has also faced intense competition from rival budget airline Ryanair, while continuing to expand its network across Europe.

Industry analysts say the airline's valuable landing slots at major airports, including London Gatwick, Paris, and Geneva, make it an attractive acquisition target.

EU Ownership Rules Could Become a Major Obstacle

Despite the board's positive response, the proposed takeover still faces regulatory challenges.

European Union aviation rules require airlines operating within the bloc to remain majority owned and effectively controlled by EU nationals.

To address these requirements, Castlelake previously announced that it would own 49% of the acquisition vehicle, while the remaining ownership would be held by two European aviation executives:

• Malaysia Airlines CEO Peter Bellew
• Aviation industry executive Mark Breen

Bellew previously served as easyJet's Chief Operating Officer between 2019 and 2022, giving him extensive experience with the airline.

Regulators are expected to closely examine whether this ownership structure satisfies EU aviation rules before approving any transaction.

easyJet's Business Remains Strong Despite Industry Challenges

Founded in 1995 by British-Cypriot entrepreneur Stelios Haji-Ioannou, easyJet has grown into one of Europe's largest low-cost airlines.

Today, the airline:

• Operates 355 aircraft
• Serves more than 1,200 routes
• Flies to destinations across 38 European countries

Although easyJet experienced significant disruption during the COVID-19 pandemic, its package holiday business and modern Airbus fleet have helped strengthen its recovery.

Stelios Haji-Ioannou and his family remain the airline's largest shareholders, holding approximately 15% of the company's shares.

Castlelake Must Submit Formal Offer by August 3

The agreement announced on Sunday is not yet a final takeover.

Under UK takeover regulations, Castlelake has until August 3 to submit a firm intention to make an official offer. If the investment firm proceeds, shareholders will then decide whether to approve the transaction.

Castlelake declined to provide further comments beyond the joint announcement, citing regulatory restrictions.

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