EasyJet shares soar 10% as budget airline agrees $7.3 billion Castlelake takeover

EasyJet Shares rose in early deals on Monday after the UK low-cost carrier accepted in principle a £5.5 billion ($7.3 billion) takeover offer from US private equity manager Castlelake.

The budget carrier was up 10.5% shortly after 8:15 a.m. in London (3:15 a.m. ET), It reached a new 52-week high.

Castlelake’s improved plan to take EasyJet private, agreed on Sunday, comes after the airline rejected a £4.93bn offer from the private equity firm last month. Castlelake made five bids in total for EasyJet.

The new offer represents a cash offer of $6.90 per share. Castlelake now must make a firm offer by August 3 or withdraw from the deal.

The offer comes at a stressful time for the global aviation industry, with airlines struggling with jet fuel shortages caused by conflict in the Middle East. The International Air Transport Association warned last month that global airlines’ profits could be halved this year due to rising jet fuel costs, which are expected to be around 70% higher on an annual basis.

In its latest half-year earnings, published on May 21, easyJet reported a pre-tax loss of £552 million for the six months ending March 31, despite half-year revenues rising 12% to £4 billion as it warned of a slowdown in price rises and bookings.

EasyJet and Castlelake said in a joint statement on Sunday: “During discussions between the parties, Castlelake emphasized its great respect for easyJet and its employees, as well as its intention to support its future growth and transformation into a stronger, more resilient European airline, for the benefit of all stakeholders, should the transaction be completed.”

Castlelake supports easyJet’s fleet modernization program and holds this at the heart of the Company’s long-term competitiveness, efficiency and sustainability objectives.”

This is breaking news. Please refresh for updates.