Key facts
- Easyjet shareholders are seeking at least £600m more than the current offer from Castlelake.
- Investors will only consider a takeover bid reaching at least £7 per share, valuing the company at £5.3bn.
- Castlelake's latest offer of £6.25 per share was rejected by Easyjet.
- The airline accused the bidder of attempting to acquire it "on the cheap."
- Easyjet plans to consult with shareholders regarding the latest offer.
Easyjet investors are demanding a higher offer from US private equity firm Castlelake, stating they will not consider bids below £7 per share, which would value the airline at £5.3bn. Castlelake's latest offer of £6.25 per share, valuing the company at £4.7bn, has been rejected by the budget airline.
Shareholders believe the current offer undervalues the company, citing its fleet and holiday business. One large investor told the Financial Times that engagement would likely only occur if the price exceeded £7. Easyjet has accused Castlelake of attempting to acquire the company "on the cheap," asserting that its approaches do not reflect the firm's strong position.
Another shareholder suggested the board might be considering higher future valuations. Despite this, one investor expressed surprise that Easyjet has not yet engaged with the suitor, emphasizing the importance of engaging in such discussions. Easyjet is reportedly planning to meet with several shareholders to gauge their reaction to the latest offer.
Castlelake claims its offer would "substantially de-risks" the company's business plan, noting that Easyjet shares have not traded at £6.25 since February 2022. Easyjet's shares fell 1% to £5.13 on Tuesday morning. Richard Hunter, head of markets at Interactive Investor, commented that Easyjet has made its expectations clear and Castlelake may need to improve its offer as time passes. He also noted that regulatory requirements for Easyjet to be majority EU-owned complicate the deal.
Russ Mould, investment director at AJ Bell, stated it's understandable why Castlelake is interested, as Easyjet appears undervalued compared to European competitors. However, he cautioned that Easyjet shareholders would be wary of selling too cheaply. Mould also highlighted that Easyjet founder Sir Stelios Haji-Iannou might be unwilling to sell his stake without a substantial premium.