EasyJet has agreed in principle to a £5.2bn takeover bid from a US investment firm.
The airline had previously rejected four offers from Castlelake, a private credit company that already holds approximately 2.14 per cent of EasyJet shares, branding its initial interest in the purchase as “highly opportunistic” and accusing it of trying to buy the company “on the cheap”.
The travel company’s board of directors said on Sunday that it had reached an agreement in principle to a proposal worth £6.90 per share. Previously rejected offers had been worth £6.50, £5.60, £6, and £6.25.
While it does not mean a deal has been confirmed, the airline’s board said that the financial terms of the proposed offer “are at a value that the Board would be minded to recommend to easyJet shareholders”.
Regulatory clearances and approvals are still required for the transaction to go through.
Castlelake has until 5pm BST on 3 August to announce their intention to make a firm offer or to express that it does not intend to make an offer.
Any firm proposal will then need to be put to a shareholder vote before it is finalised.
The negotiations between the two companies has been marred by candid public statements, including accusations by Castlelake that EasyJet had demonstrated a failure to “engage meaningfully”.
Following the announcement of the agreement in principle the firm said that it “emphasised its tremendous respect for easyJet and its people, along with its intention to support its future growth and transformation to a stronger, more resilient European airline”.
EasyJet has expressed suspicion over Castlelake’s initial interest and said that the company’s takeover interest came at a time when its share price has been pushed lower by worries over the impact of the Iran war on the airline sector.
The FTSE 250 firm’s shares were down around 30 per cent in the past year, before the company expressed a bid interest.
At the time, EasyJet said there were “considerable regulatory, financial and other execution challenges associated with a potential takeover of easyJet”.
Castlelake, led by executive chairman and founder Rory O’Neill, has previously bailed out collapsed Scandinavian Airlines (SAS) before selling its shares to Air France-KLM, and entered talks to takeover bankrupt US carrier Spirit Airlines in January.
The company has assets under management worth 36 billion US dollars (£27.3 billion).
