LONDON: Investment firm Castlelake LP on Monday made public its third non-binding proposal to acquire easyJet Plc for 625 pence per share in cash, valuing the British low-cost carrier at approximately £4.2 billion, after the company’s board rejected three successive private approaches.
Castlelake, a U.S.-based asset manager with two decades of experience in Europe, said it submitted its initial proposal of 560 pence per share on June 12, which was rejected by the easyJet board four days later.
A second offer of 600 pence per share, submitted June 17, was also turned down on June 20. The board rejected the latest 625-pence proposal on Sunday, Castlelake said.
The proposed price represents a 59% premium to easyJet’s closing share price of 394.20 pence on May 28, the last trading day before Castlelake’s interest in the airline became public.
It also exceeds all research analyst price targets published since the company’s interim trading update on April 16 and marks the highest per-share price since February 2022, according to Castlelake.
“Following the rejection of three proposals by the easyJet Board, and given its unwillingness to engage meaningfully, Castlelake is announcing this Third Proposal to enable easyJet shareholders to consider its merits,” the firm said in a statement.
The offer is subject to customary pre-conditions, including satisfactory due diligence and the agreement of definitive transaction documentation. Castlelake said it has already conducted an extensive review of publicly available information and is prepared to begin a focused due diligence exercise immediately, with the aim of announcing a firm offer on an expedited basis.
Under UK takeover rules, Castlelake faces a “put-up or shut-up” deadline of 5 p.m. London time on June 26 to either announce a firm intention to make an offer or walk away. The deadline can be extended with the consent of the Takeover Panel.
Castlelake said it intends to offer a partial equity alternative allowing easyJet shareholders to retain a stake in the privatized company, subject to a maximum participation limit and transferability restrictions.
The proposed acquisition structure includes a partnership with Peter Bellew and Mark Breen, experienced aviation executives and EU nationals, who will own and control an EU company that would hold a controlling stake in the overall entity. Castlelake said the structure is designed to ensure compliance with European Union ownership requirements, which mandate that EU airlines be majority-owned and effectively controlled by EU nationals.
“Castlelake’s ambition is to support easyJet as a stronger, more resilient European airline under European control,” the firm said, adding that it respects “the form, spirit and importance of the EU ownership requirements.”
Castlelake said its offer is fully funded through committed equity from funds it manages, co-investors and the EU partner, alongside debt financing that Goldman Sachs has indicated it is “highly confident” of arranging. The firm said the post-acquisition company would remain well-capitalized with ample liquidity.
The 625-pence offer implies a price-to-2027 expected earnings multiple of 16.5 times, Castlelake said. The firm also estimated that the proposal compares favorably to the net present value of easyJet’s share price, even assuming the company achieves its aspirational target of more than £1 billion in medium-term profit before tax.
Castlelake acknowledged that Peter Bellew acquired 50,000 easyJet shares, approximately 0.007% of the company, in a series of transactions between March 2 and May 20 at prices up to 437.14 pence per share. Under UK takeover rules, any formal offer must be at no less than that price.
EasyJet has not yet publicly responded to Castlelake’s latest proposal. A representative for the airline did not immediately return a request for comment.
Castlelake said it reserves the right to vary the terms of its proposal or withdraw it under certain conditions, including if a third party announces a competing offer or if easyJet announces a Rule 9 waiver transaction. The firm cautioned that there is no certainty any firm offer will be made.
