EasyJet rejects Castlelake’s £4.7bn takeover proposal as undervalued
Board deems offer "highly opportunistic" amid depressed share prices
EasyJet has firmly rejected three takeover proposals from US investment fund Castlelake, labelling the latest £4.74 billion bid as an attempt to buy the airline "on the cheap."
Castlelake's latest offer, made public on June 20, values easyJet shares at 625p each—a considerable step up from its previous bids of 560p and 600p per share.
However, easyJet dismissed the offer on June 21, criticising it for being fundamentally undervalued and not aligning with shareholder interests.
Concerns Over Timing and Valuation
"The board of easyJet carefully considered the third proposal with its advisers and concluded that it is highly opportunistic," the airline said.
The airline argued the proposal comes when its share price remains "temporarily depressed" due to concerns over the Iran war and subsequent impacts on the airline sector.
Despite a decrease of about 30% in easyJet's share price over the past year, shares saw a rise to 518.5p following Castlelake's public announcement.
Shareholder Engagement
Castlelake, holding around 2.14% in easyJet, feels thwarted by easyJet's refusal to engage in "meaningful" discussions, prompting the decision to approach shareholders directly.
Ahead of the Put-up or Shut-up deadline on 26th June, Castlelake insists that its offer presents "compelling value" with a 59% premium compared to pre-interest share prices.
Ownership Structure Concerns
EasyJet has criticised Castlelake's proposed ownership structure, describing it as "opaque."
Under the plan, Castlelake could hold 49% ownership, while the remainder would be split among EU nationals and undisclosed investors.
Castlelake aims to de-risk easyJet’s business strategy, collaborating with EU investors Peter Bellew and Mark Breen, experienced in the airline sector.
Castlelake's Past Endeavours
Led by executive chairman Rory O’Neill, Castlelake oversees assets of 36 billion US dollars (£27.3 billion) and has history with European airlines, notably with Scandinavian Airlines (SAS).
The investment fund has entered takeover talks with Spirit Airlines in the USA earlier this year.
While EasyJet touts its robust financial standing, focused on achieving more than £1 billion in pre-tax profits, shareholders are left to ponder the implications amid Castlelake's active interest.