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easyJet agrees in principle
easyJet agreed in principle to accept a sweetened takeover bid from U.S. investment firm Castlelake that values the carrier at up to £5.5 billion ($7.34 billion), with the new offer set at £6.90 a share.
“Castlelake, an American investment fund, is studying a potential buyout offer for the airline”
The offer represents a 73% premium to easyJet's closing price on May 29, when Castlelake disclosed its interest in the airline to British regulators, driving the shares up steeply since then.
easyJet said its board was “minded to recommend” the £6.90-per-share value to shareholders if a firm offer is made by August 3, the deadline for Castlelake to submit its firm intention.
The deal would see the U.S. investor take the 31-year-old easyJet private, coinciding with operating challenges for airlines as they grapple with sharply higher fuel prices and profit pressure due to the Iran conflict.
easyJet had rejected a £4.93 billion proposal from Castlelake in June but signalled interest in continuing talks by granting the private equity manager limited access to the airline's commercial data.
Regulatory hurdles and stakeholders
The takeover terms hinge on EU ownership rules requiring airlines operating in the bloc to be majority owned and controlled by EU nationals, a hurdle analysts had raised even though it was not mentioned in Sunday's deal.
Castlelake previously said it would own 49% of the bidding vehicle with the remainder held by two EU nationals, former Malaysia Airlines CEO Peter Bellew and senior industry executive Mark Breen.
easyJet's statement said Castlelake “has emphasised its tremendous respect for easyJet and its people,” while also stating an intention to support future growth and transformation to a “stronger, more resilient European airline.”
The Guardian reported that easyJet's founder Stelios Haji-Ioannou still owns more than 15% of the company along with his family, and that the airline was minded to accept the £6.90-per-share offer.
The Guardian also said Castlelake has until 5pm on 3 August to make a firm offer or walk away, keeping the transaction dependent on regulatory clearances and shareholder approval.
What happens next
If Castlelake submits a firm offer by August 3, the agreement in principle would still require due diligence and customary procedures before any formal launch of the offer.
“- Published EasyJet has reached an agreement in principle with a US investment firm over a potential takeover offer worth around £5”
Travel Weekly said Castlelake has until 5pm on August 3 to either announce a firm intention to make an offer or walk away, and that any final offer would remain subject to a shareholder vote.
easyJet's shares closed at £5.58 on Friday, and the Guardian said the deal could be worth nearly £800m for easyJet’s founder Stelios Haji-Ioannou if it completes.
The Guardian also described how easyJet had been deemed vulnerable to a takeover this year because of two profit warnings in the spring and a difficult macroeconomic backdrop tied to the fuel price surge caused by the US-Israeli war on Iran.
Ryanair was cited in the Gulf News piece for a profit jump of 35 percent on its full year return, while also warning of problems ahead caused by the Middle East war, underscoring the competitive pressure facing easyJet as talks progress.
