Easyjet rejects fourth bid but holds out for ‘more attractive’ offer
Easyjet has slapped down suitor Castlelake for a fourth time but said it was open to a “more attractive proposal” from the US private equity firm.
The budget airline revealed on Thursday it had rejected a £6.50 per share bid, which valued it at £4.9bn, saying that Castlelake was “substantially undervaluing the company and its prospects”.
The FTSE 250 firm also said it has significant concerns over the ownership structure and “deliverability” of Castlelake’s proposed deal.
But Easyjet’s board signalled it is willing to engage with the private equity firm and said it plans to give the bidder some commercial information to help it produce a “more attractive proposal”.
Castlelake’s latest offer included proposals for Easyjet shareholders to gain non-voting shares in its takeover vehicle.
Easyjet agrees to share information
This bidding vehicle would be 49 per cent owned by Castlelake and 51 per cent by EU nationals, including former Malaysia Airlines boss Peter Bellew and Mark Breen, chief executive of Dublin-based Oneiros Aerospace.
Their involvement in the bid is necessary due to EU competition rules which require the takeover to have significant involvement from European citizens.
The carrier said on Thursday: “The Board continues to be concerned about the ownership structure and deliverability of any offer from Castlelake, and the time it will take, with the consequent meaningful impact on the present value of the offer price, to satisfy necessary conditions.
“The Board has informed Castlelake that it would expect satisfactory assurances and commitments in these regards.”
Easyjet told to hold out for £7 per share
This fourth offer comes after Easyjet rejected bids at £5.60, £6 and £6.25 per share. The firm’s shares closed at £5.39 on Wednesday.
The airline had described Castlelake’s previous bids as an “opportunistic” pounce on the firm at a time when its share price has fallen to comparative lows due to the Iran war.
Following the rejection of its third bid, the private equity firm made a public appeal for investors to review the bid themselves and lobby the airline to engage with it.
The bidder criticised the carrier for its “unwillingness to engage meaningfully” with its interest in a takeover, which kicked off with its first bid on 12 June.
Some investors have been urging Easyjet to hold out for a £7 per share offer. One large shareholder told the Financial Times: “I think they’ll engage if the price is at seven plus.”
The firm’s share price jumped five per cent on Thursday’s early trading, to 567p.