EasyJet has decisively turned down a takeover bid of £4.7 billion from the US investment firm Castlelake, characterizing the offer as "highly opportunistic" during a period of temporary market volatility.
The airline's firm rejection follows Castlelake’s announcement of three separate bid proposals this month, all of which have been dismissed by EasyJet’s board. In a bold maneuver, Castlelake has now made its latest offer publicly known, aiming to sway EasyJet shareholders to consider its proposal. Under takeover regulations, Castlelake has until this Friday to either submit a firm offer or withdraw from the negotiations.
As one of Europe's leading low-cost carriers, EasyJet caters to a substantial customer base, having flown over 90 million passengers last year across 38 countries on more than 1,200 routes. EasyJet argues that its share price has been artificially depressed, primarily due to the negative impacts of the ongoing Iran conflict on the travel landscape.
Castlelake's latest proposition presents EasyJet's shareholders with an opportunity to gain 625 pence per share, which constitutes a premium of 24% compared to the closing price at the end of the previous week. The firm, which already holds approximately 2.14% of EasyJet’s shares through managed funds, claims that this offer brings "compelling value" for shareholders.
“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,” the firm stated in a press release.
Castlelake aims to reinforce EasyJet’s position as a more robust European airline while ensuring it remains under majority European control, complying with EU regulations pertaining to airline ownership. This structure involves a partnership with two EU nationals, businessmen Peter Bellew and Mark Breen, who would oversee the majority control of the airline through an EU-based company. Bellew, a former chief operating officer at EasyJet, and Breen, who manages an aerospace consultancy, both bring significant airline experience to the proposed governance.
Despite these assurances, EasyJet remains skeptical about the proposed ownership arrangement, labeling it as "opaque" and lacking a clear basis for evaluating the feasibility of the takeover.
The developments come at a crucial juncture for the airline industry, which is navigating the complexities of recovery following global disruptions. As the situation unfolds, all eyes will be on how both EasyJet and Castlelake proceed amid shareholder pressures and regulatory compliance challenges.
Source: BBC News - Business