EasyJet Shares Rise Following Takeover Agreement
Shares in EasyJet surged nearly 10% after the airline agreed to a £5.5 billion takeover at its fifth attempt. Analysts noted that the deal highlighted how UK firms are being acquired at relatively low valuations.
The low-cost carrier’s board will recommend that shareholders accept an offer price of £6.90 per share from Castlelake, a US private equity firm. This follows previous offers as low as £5.60 per share. EasyJet shares closed at 610p on Monday.
Under City takeover rules, Castlelake must submit a formal bid by 3 August.
Takeover Intentions and Strategy
In a joint announcement from EasyJet and Castlelake, the new potential owners indicated their support for EasyJet’s current strategy and stated they do not intend to break up the company.
EasyJet noted that during discussions, Castlelake had:
“emphasised its tremendous respect for easyJet and its people, along with its intention to support its future growth and transformation to a stronger, more resilient European airline for the benefit of all stakeholders if the transaction proceeds to completion”.
Furthermore, Castlelake expressed support for EasyJet’s fleet modernisation programme, which it considers central to the company’s long-term competitiveness, efficiency, and sustainability objectives.
The latest offer also provides current shareholders the option to remain invested under Castlelake’s ownership if the deal proceeds, rather than requiring divestment upon delisting.
Shareholder and Market Reactions
EasyJet’s largest single shareholder, its founder Stelios Haji-Ioannou, who retains about 15% ownership alongside his family, has not yet publicly commented on the bid.
City analysts have expressed concerns that the deal exemplifies a trend of London-listed UK firms being acquired by foreign buyers at undervalued prices.
Kathleen Brooks, research director at brokerage firm XTB, commented:
“An iconic British aviation name would be put in US hands. This deal is symbolic, as it suggests a lack of stock market growth, and persistent underperformance of UK equities means that there is a massive for sale sign above UK corporates.”
Garry White, chief investment commentator at financial services firm Raymond James, added:
“The number and size of takeover bids from overseas buyers suggest that many UK-listed companies remain significantly undervalued. It is clear UK companies are currently being sold off on the cheap.”
Conversely, Andrew Lobbenberg of Barclays stated that the bid price offered good value to shareholders and presented an opportunity for Castlelake, noting that markets tend to undervalue firms prior to large capital investments.
“We do not expect a radical change in the business plan of easyJet. We expect that Castlelake will continue to develop the holidays business and grow the airline modestly,”
he said.
Company Overview and Recent Performance
EasyJet, headquartered at London Luton Airport but primarily based at Gatwick, employs approximately 19,000 people and transports about 93 million passengers annually. Its shares had declined by roughly 30% over the past year before Castlelake’s bid interest became public.
