Fifth Time Lucky For Castlelake and easyJet?

After four rejected offers, the Board of UK low-cost carrier easyJet is willing to recommend a fifth offer from Castlelake to its shareholders. A final decision on the takeover bid is due only when the August 3 deadline is met, but a deal seems closer than ever. Once completed, this could drastically shake up the airline industry in Europe. Castlelake presented its fifth offer to easyJet on Saturday, July 4. The US investor said it wants to acquire “the entire issued and to be issued ordinary share capital of easyJet not already held by Castlelake for £6.90 per share in cash, including a partial unlisted share alternative (the “Fifth Proposal”). In connection with the Fifth Proposal, Castlelake has confirmed that it would agree to a "best endeavours" commitment in any cooperation agreement to obtain any regulatory clearances and approvals required to consummate the transaction.” When Castlelake announced its intention to make its first offer on May 29, it said it would be for a minimum of 403 pence per share. easyJet rejected this as “highly opportunistic”, as Castlelake had based the lower value of the airline at around £4.0 billion on the recent weaker economic position. The actual first offer from Castlelake on June 11, which at the time owned 2.14 percent of easyJet, was for 560 pence per share. Castlelake upped this on June 17 to 600 pence, then to 625 pence on June 20. This was a 59 percent premium on easyJet’s share price of 394 pence on May 28, the day before Castlelake showed its interest. Again, easyJet rejected the offer. After Castlelake again upped its offer on June 23 to 650 pence, easyJet started to move. While still rejecting the offer as “substantially undervaluing the Company and its prospects”, the Board offered Castlelake access to limited commercial information “to produce a more attractive proposal that better reflects the value of easyJet and its prospects and the interests of shareholders.” Agreement A “Put up or Shut up” deadline was extended until July 5 and CastleLake responded with the fifth offer for 690 pence per share on July 4. This translates into a value of £5.5 billion. In a joint statement on July 5, the investor and airline said they had reached an agreement in principle on the key financial terms of a recommended cash offer. This included Castlelake’s "best endeavours" commitment in any cooperation agreement to obtain any regulatory clearances and approvals required to consummate the transaction. The statement continues: “Having carefully reviewed it with its advisers, the Board of easyJet concluded that the financial terms of the Fifth Proposal are at a value that the Board would be minded to recommend to easyJet shareholders, should a firm intention to make an offer pursuant to Rule 2.7 of the Code be announced on such financial terms, subject to the agreement of all other terms and conditions of such offer, including the partial unlisted share alternative. The Fifth Proposal is subject to satisfaction or waiver (by Castlelake) of several customary pre-conditions, including the completion of satisfactory due diligence and the agreement of definitive transaction documentation.” In a disclaimer, both easyJet and Castlelake say: “There can be no certainty that any firm offer will be made, even if any pre-conditions are satisfied or waived. The Board will issue a further statement as and when appropriate. In the meantime, easyJet shareholders are advised to take no action.” Castlelake has until 5 pm on August 3 to confirm its offer. The statement doesn’t make reference to any other partners, but with EU rules restricting non-EU ownership to 50 percent, Castlelake needs a European partner to complete the acquisition. This is believed to be the Swiss shipping company MSC, which in 2023 was looking at investing in ITA Airways. What’s next? With the acquisition now a step closer, the big question is: what has Castlelake in mind with easyJet? “Castlelake is supportive of easyJet's fleet modernisation programme, which it regards as central to the Company's long-term competitiveness, efficiency and sustainability objectives”, the investor repeated in the July 5 statement. Does this mean that it is mostly interested in the 287 Airbus A320neo family aircraft that easyJet has on order until 2034, plus 70 neos in the active fleet? Will Castlelake split up easyJet, with the fleet, airport slots and landing rights, and easyJet Holidays being monetised/sold? This scenario would almost certainly mean the end of easyJet as a complete airline, with competitors keen to buy whatever is of interest to them. While this would benefit easyJet’s and Castlelake’s shareholders, competition in Europe could be worse off as a major player will disappear from the market. Remember, easyJet carried 93.4 million passengers around Europe last year, generating £8.7 billion in airline revenues. It has a strong market position in the UK, but also in Switzerland, while trying to build up share in Italy, as it was designated the remedy taker after Lufthansa bought a share in ITA Airways.

US Flight Planner - US DoT On-Time Data	Airbus vs Boeing - Official OEM Data
US Airline Schedule Performance - US DoT Data	Daily OEM Production & Deliveries -

Subscribe To Our Newsletter

Related News

Subscribe To Our Newsletter

Related News

Air India’s Deferral Is a Customer Problem

Fleet Age Has a Price. Here’s the Data.

Air Traffic starts to soften?