The airline EasyJet has indicated that it intends to accept a £5.5bn takeover offer from the US investment firm Castlelake. This decision follows weeks of negotiations and several rejected proposals, including an offer of £6.50 per share. The companies announced their agreement in principle on Sunday evening, signaling a move to take Britain's largest low-cost carrier private.
Details of the Takeover Agreement
EasyJet's board has expressed its intention to accept an offer valued at £6.90 per share, which would substantially benefit its founder, Stelios Haji-Ioannou, who holds over 15% of the company. The deal, if finalized, could be worth nearly £800m for him and his family. Shares of EasyJet closed at £5.58 on Friday, giving the airline a market value of £4.2bn.
Prior to this agreement, EasyJet had rejected multiple offers from Castlelake, which included an initial bid of £5.60 per share. The airline's shares have not traded above £6.90 since early 2022 during the pandemic, prompting some shareholders to demand a price above £7.
Market Context and Challenges
EasyJet has faced significant challenges this year, including two profit warnings in the spring and adverse market conditions due to rising fuel prices linked to the ongoing US-Israeli war on Iran. EasyJet's CEO, Kenton Jarvis, reported a decline in bookings attributed to the conflict. Additionally, the airline contends with fierce competition from low-cost rivals such as Ryanair, Wizz Air, and Jet2.
