EasyJet says US takeover bid would be ‘highly opportunistic’ | easyJet
EasyJet has described a potential £3bn bid from a US investment group as “highly opportunistic”; because the budget airline’s shares rose to a three-month high with takeover interest.
US private lender Castlelake said on Friday it was considering a takeover bid for the airline. On Monday it said it had already bought a 2.14% stake in the business and its bid would value easyJet at at least 403 pence per share, or around £3bn in total.
But easyJet hit back at its potential buyer, saying it was “highly opportunistic timing” as the share price was “temporarily low due to the current situation in the Middle East and its impact on customer confidence and jet fuel prices”.
Before news of the takeover interest emerged, shares in easyJet had lost around a fifth of their value since the start of the year.
However, the company said it was confident in the board’s strategy given its cash position and profit outlook.
easyJet’s shares rose as much as 12% to 444.7p in early trading on Monday; This is well above the minimum level of Castlelake’s potential offer and values the company at around £3.4bn, the highest since March 2. The bounce then eased and shares rose nearly 10%.
Castlelake, which is headquartered in Minneapolis and manages $36 billion (£27 billion) in assets, has until 5pm on June 26 to announce whether it will make an offer for easyJet, under the City’s takeover rules.
EasyJet said it would “consider any offer” but said there were “significant regulatory, financial and other implementation challenges associated with a potential takeover”.
Under EU rules, the majority of European airlines must be owned by investors in the region. Ruairi Cullinane, an analyst at broker RBC Capital Markets, said the rules “could at least make a takeover of easyJet by Castlelake more difficult if acted alone”.
It’s not the first time a FTSE 100 airline has attracted potential buyers. In October, reports emerged that Switzerland-based shipping company MSC was considering taking over the business. The company also rejected the approach of rival Wizz Air in 2021.
Headquartered in Luton and employing more than 16,000 people worldwide, EasyJet is one of the three largest budget airlines in Europe, after Ryanair, and Wizz Air ranks third.
The business was founded by billionaire Stelios Haji-Ioannou. He remains the company’s single largest shareholder, with a stake of approximately 15%. Haji-Ioannou declined to comment Monday.
Castlelake already has a strong presence in the airline industry, providing loans to Scandinavian airline SAS as well as Virgin Atlantic Airways.
Susannah Streeter, Wealth Club’s chief investment strategist, said: “Castlelake clearly believes the market has underestimated easyJet’s long-term earnings potential and the flexibility of its network.”
The takeover of EasyJet would mark another significant loss for London’s struggling stock market, which has seen a series of high-profile exits in recent years, including construction equipment rental company Ashtead, gambling group Flutter Entertainment and construction materials provider CRH.
Streeter added: “This is further evidence that British markets are increasingly becoming a hunting ground for sophisticated institutional investors, with UK-listed shares continuing to trade at lower valuations than other markets.”
