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Castlelake, a US private credit firm that manages $36bn in assets, said it is weighing a takeover bid for easyJet that would value the European budget carrier at roughly £3bn. easyJet’s board pushed back immediately, calling the timing of the move “highly opportunistic.”
The Minneapolis-headquartered investment group disclosed Monday that it had already purchased a 2.14% stake in easyJet and was considering an offer of at least 403p per share. Under City of London takeover rules, Castlelake has until 5pm on 26 June to announce whether it intends to formalize the bid.
easyJet’s shares had lost about a fifth of their value since the start of the year before the takeover interest surfaced, dragged down by instability in the Middle East and its effect on jet fuel prices and customer confidence. The airline said its share price was “temporarily depressed” and that the board was confident in the company’s strategy given its cash position and profit outlook.
Shares in easyJet jumped as much as 12% in early trading on Monday, reaching 444.7p — well above the minimum threshold of any potential Castlelake offer and their highest level since 2 March. The share price later pulled back to a gain of about 10%, valuing the company at roughly £3.4bn.
Castlelake already has a significant presence in the airline industry, having provided loans to Scandinavian carrier SAS and to Virgin Atlantic Airways. The firm manages $36bn, or about £27bn, in assets.
Susannah Streeter, chief investment strategist at Wealth Club, said Castlelake “clearly believes the market may be underestimating easyJet’s longer-term earnings potential and the resilience of its network.”
Any deal would face regulatory hurdles. Under European Union rules, airlines operating within the bloc must be majority owned by EU-based investors. Ruairi Cullinane, an analyst at RBC Capital Markets, said those rules “could, at the very least, complicate a takeover of easyJet by Castlelake, if acting alone.”
easyJet said it would “consider any proposal, should one be made” but cautioned that there were “considerable regulatory, financial and other execution challenges associated with a potential takeover.”
The airline, headquartered in Luton, England, employs more than 16,000 people worldwide and ranks among Europe’s three largest budget carriers, behind Ryanair and ahead of Wizz Air. It was founded by billionaire Stelios Haji-Ioannou, who remains the biggest single shareholder with a stake of about 15%. Haji-Ioannou declined to comment Monday.
It is not the first time easyJet has attracted takeover interest. Reports emerged in October that Swiss-headquartered shipping company MSC was considering an acquisition, and rival Wizz Air made an approach in 2021 that easyJet rejected.
A successful Castlelake bid would mark another high-profile departure from the London Stock Exchange, which has seen a string of exits in recent years from companies including construction equipment rental firm Ashtead, gambling group Flutter Entertainment, and building materials provider CRH.
Streeter said the potential bid was “fresh evidence that the British markets are increasingly becoming a hunting ground for sophisticated institutional investors, with UK-listed stocks continuing to trade at lower valuations than other markets.”
Going deeper: Read MSI’s analysis of Castlelake easyJet regulatory dynamics →