EasyJet's share price rose only 10% on news of a possible takeover approach from US investment fund Castlelake, indicating market scepticism about the deal's prospects. Analysts say three key factors must be clarified before the bid can be taken seriously.
First, valuation is a major sticking point. EasyJet described Castlelake's timing as 'highly opportunistic', and with pre-tax profits forecast as low as £100m this year versus £665m last year, the airline's board may demand a significant premium. The book value of easyJet's owned fleet is estimated at 615p per share by Goodbody, and 650p by Bank of America, well above the current share price of around 400p.
Second, European ownership rules require majority UK/EU ownership of airlines, posing a challenge for a US bidder. Castlelake would likely need a European partner to comply, and clarity on this issue is essential before formal talks can begin.
Third, founder Sir Stelios Haji-Ioannou and his family hold a 15% stake, enough to block any deal. While he has been less vocal recently, his position remains a potential obstacle.
EasyJet has long been seen as a takeover target, with IAG, owner of British Airways, viewed as a natural suitor. However, Castlelake's approach as a financier rather than an airline operator raises questions about its ability to deliver a deal. The bidder has acquired a 2% stake, signalling some seriousness, but a full bid still appears distant.
