Key facts
- EasyJet has agreed to a £5.5bn takeover bid from US private equity firm Castlelake.
- The offer price is £6.90 per share, which the board will recommend shareholders accept.
- This is the fifth bid from Castlelake, following four previous rejections.
- Castlelake has expressed respect for EasyJet and its intention to support future growth.
- The deal suggests UK companies are being acquired at low valuations, according to analysts.
EasyJet shares surged nearly 10% after the airline's board agreed to recommend a £5.5bn takeover bid from US private equity firm Castlelake. The offer price of £6.90 per share comes after Castlelake's previous four bids, ranging from £5.60 per share, were rejected.
Castlelake has indicated its intention to support EasyJet's current strategy, fleet modernization program, and future growth, aiming to foster a stronger, more resilient European airline. The proposed transaction also allows current shareholders the option to remain invested under Castlelake's ownership.
Analysts, however, voiced concerns that the deal highlights a trend of UK firms being acquired cheaply by foreign buyers, suggesting a lack of stock market growth and persistent underperformance of UK equities. "This deal is symbolic, as it suggests a lack of stock market growth, and persistent underperformance of UK equities means that there is a massive for sale sign above UK corporates," said Kathleen Brooks, Research Director at XTB. Garry White, Chief Investment Commentator at Raymond James, echoed this sentiment, stating that the number and size of takeover bids from overseas buyers indicate many UK-listed companies remain significantly undervalued.
Andrew Lobbenberg of Barclays offered a different perspective, suggesting the bid price offers good value to shareholders and an opportunity for Castlelake, as markets tend to undervalue firms requiring substantial capital investment. He anticipates Castlelake will continue developing the holidays business and grow the airline modestly without radical changes to the business plan.
EasyJet, which employs 19,000 people and flies approximately 93 million passengers annually, had seen its shares fall by about 30% in the past year before Castlelake's bid interest emerged. The founder, Stelios Haji-Ioannou, who owns about 15% of the company with his family, has not yet commented on the bid. Castlelake is required to table a formal bid by August 3 under City takeover rules.