Shares in easyJet rose nearly 10% on Sunday after the airline's board agreed to a £5.5 billion takeover offer from US private equity firm Castlelake. The deal marks the fifth attempt by Castlelake, which proposed an offer price of £6.90 per share, up from previous bids that started at £5.60. EasyJet shares closed at 610p following the announcement.
Deal Details
The airline stated that Castlelake's offer is supported by the firm's respect for easyJet and its commitment to the airline's growth strategy. In a joint announcement, both parties confirmed that Castlelake intends to maintain easyJet's current operational strategy and support its fleet modernization program, which is seen as critical for the airline's long-term competitiveness and sustainability. Current shareholders will also have the option to remain invested under Castlelake's ownership if the deal goes through.
Market Reaction
Analysts expressed mixed feelings about the takeover, indicating it reflects a trend of UK firms being acquired at lower valuations. Kathleen Brooks, research director at brokerage firm XTB, noted that the deal symbolizes a lack of growth in the London stock market and highlights concerns over foreign ownership of iconic UK companies. The largest shareholder, Stelios Haji-Ioannou, who owns about 15% of easyJet, has not publicly commented on the offer yet.
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The acquisition could lead to increased volatility in UK airline stocks, particularly as foreign interest in UK firms raises concerns about domestic market performance. Investors may watch for further developments in the deal, including the formal bid due by August 3.
Watch for the formal bid from Castlelake, which is expected to be submitted by August 3 under City takeover rules.