LUTON — EasyJet rejected a potential £3bn takeover bid from US investment firm Castlelake on June 24, 2024. The airline called the approach "highly opportunistic" and said the timing exploited a temporary dip in its share price caused by regional instability.
EasyJet said its share price was "temporarily depressed due to the current situation in the Middle East and its impact on customer confidence and jet fuel prices." The airline’s shares had fallen roughly 20% since the start of the year before news of Castlelake’s interest emerged.
EasyJet’s board expressed confidence in its current strategy, citing its strong cash position and profit outlook. The company added it would "consider any proposal, should one be made," but noted "considerable regulatory, financial and other execution challenges associated with a potential takeover."
Shares in EasyJet rose as much as 12% in early trading on Monday, reaching 444.7p—the highest level since March 2—and pushing the company’s market valuation to approximately £3.4bn. Castlelake, a private credit firm based in Minneapolis that manages $36bn in assets, has acquired a 2.14% stake in the airline and has until 5pm on June 26 to formally announce whether it intends to proceed with an offer under UK takeover rules.
Ruairi Cullinane, an analyst at RBC Capital Markets, said EU ownership rules "could, at the very least, complicate a takeover of easyJet by Castlelake, if acting alone," given that European airlines must be majority-owned by investors within the region.
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." She added: "This is 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."
EasyJet, headquartered in Luton and employing more than 16,000 people worldwide, is one of Europe’s three largest low-cost carriers. The company was founded by billionaire Stelios Haji-Ioannou, who remains its largest single shareholder with a 15% stake. He declined to comment on the matter on Monday.