EasyJet has unanimously rejected a higher £4.93 billion takeover approach from US asset manager Castlelake, but has extended the offer deadline to allow the suitor more time to present a more attractive proposal.
Rejection of the £4.93bn Offer
The low-cost airline's board confirmed that the proposal, which valued the company at approximately £4.93 billion, was turned down as it did not reflect the full value of the business. The decision was unanimous among directors.
According to a statement from EasyJet, the board believes the offer significantly undervalues the company's prospects, including its strong balance sheet, network, and brand. The airline has seen a recovery in travel demand post-pandemic, with record summer bookings expected.
Extension of Deadline
Despite the rejection, EasyJet has granted Castlelake an extension to the original deadline under UK takeover rules. The new deadline gives the US firm additional time to either improve its offer or walk away. The move is seen as a tactical step to encourage a higher bid.
Castlelake, which already holds a stake in EasyJet, first approached the airline in May with a preliminary offer. The revised bid of £4.93 billion represents a premium over the company's share price prior to the initial approach.
Market Reaction and Analyst Views
Shares in EasyJet rose slightly following the announcement, as investors remain hopeful of a potential bidding war or a higher offer. Analysts have noted that the rejection could open the door for other interested parties, including rival airlines or private equity firms.
One analyst commented: "EasyJet's rejection is a clear signal that the board believes the company is worth more. With strong summer demand and cost-cutting measures in place, the airline is in a good position to command a higher price."
Background on Castlelake
Castlelake is a US-based alternative investment firm with over $20 billion in assets under management. It has a history of investing in aviation assets, including aircraft leasing and airline financing. The firm has been building a stake in EasyJet over the past year, making it one of the airline's largest shareholders.
The takeover attempt comes amid consolidation in the European airline industry, with carriers seeking scale to compete with low-cost rivals and legacy carriers.
What Happens Next
Under UK takeover rules, Castlelake now has until a new deadline to announce a firm intention to make an offer or confirm it will not proceed. If no improved bid is made, the matter will lapse. EasyJet's board has stated it remains open to engaging with Castlelake or any other potential bidder if a proposal reflects the company's true value.
