(June 25): EasyJet Plc rejected a fourth bid by Castlelake LP that values the UK discount carrier at about £4.93 billion (US$6.5 billion), while granting the investment firm more time and access to improve its offer, in a sign that opposition to a takeover might be waning.
The airline sought an offer extension to July 5, giving Castlelake a little more than an additional week to weigh its options. Castlelake’s bidding group includes Brookfield Asset Management Ltd, as well as European Union nationals, among them airline executives Peter Bellew and Mark Breen, that would hold a majority to overcome ownership restrictions.
EasyJet said the sweetened bid of £6.50 a share still undervalues the company, while the extra time and more access to limited commercial information “might produce a more attractive proposal that better reflects” the carrier’s value.
Castlelake’s latest overture improves on a previous bid of £6.25 a share. EasyJet’s shares have consistently traded well below that range, suggesting investors are doubtful a bid will materialise at that level.
The two sides have sparred over the potential deal in the past month. The investment firm said EasyJet’s board has shown “unwillingness to engage meaningfully,” prompting the move to take its offer directly to shareholders. The UK airline has called the overtures “highly opportunistic” and said the US investment firm was trying to buy the carrier “on the cheap.”
EasyJet reiterated on Thursday that it finds itself in “a position of strength, and the company said that it’s concerned about the ownership structure and “deliverability” of any offer from Castlelake.
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As a US entity, Castlelake cannot take majority control of a European aviation asset, requiring the need of a partner. The US company said in its last offer that it teamed up with Breen and Bellew, who was an executive at EasyJet before his acrimonious departure at the start of the decade.
To a possible suitor, EasyJet offers attractive landing slots in places like Milan, Geneva and Luton near London, and the company operates a fleet of modern Airbus SE A320-type aircraft that are the most popular type of commercial airliner.
The single-biggest shareholder of EasyJet is the family of its founder, Stelios Haji-Ioannou, that holds a 15.3% stake. About 70% of the shares are held by investment firms, according to data compiled by Bloomberg.
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