(June 22): EasyJet Plc has rejected three separate offers from Castlelake LP, prompting the investment firm to take its latest proposal that values the budget carrier at about £4.74 billion (US$6.3 billion or $8.1 billion) directly to shareholders.
The UK airline rejected the most recent bid of 625 pence, the two companies said Monday. That’s up from 560 pence on June 12, according to Castlelake. EasyJet shares rose as much as 3.7% to 522.8 pence in early London trading.
EasyJet said it rejected the proposal as not being in the best interest of shareholders, accusing Castlelake of trying to buy the company “on the cheap.”
“The board remains highly confident in EasyJet’s strategy and its ability to deliver attractive long-term value for shareholders,” the company said in a statement in response to Castlelake going public. “EasyJet is in a position of strength, underpinned by an investment grade balance sheet with a net cash position, alongside strong customer satisfaction and high employee engagement.”
Castlelake first revealed at the end of May that it was in the early stages of considering a bid for the UK budget carrier. As a US entity, the company can’t take full control of a European aviation asset and would need a partner for a successful bid. The US company said on Monday that it teamed up with Mark Breen as well as Peter Bellew, who is a former executive at the low-cost carrier.
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 airline’s board again called the bid opportunistic as the company’s share price suffered from the fallout of the Iran war, which drove up fuel prices for carriers around the world.
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The investment firm said EasyJet’s board has shown “unwillingness to engage meaningfully,” prompting the move to go to shareholders. Castlelake said it would offer a partial-equity alternative that would allow shareholders in the airline to remain invested.
The investment firm said in May that it would provide an update on its intentions no later than June 26.
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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The emergence of Bellew adds a twist to the bid as it would bring a former EasyJet manager back into the fold. Bellew was chief operating officer at EasyJet before his controversial exit shortly before the pandemic to join low-cost rival Ryanair Holdings Plc, which set off a court battle between the two companies. The Irish national also worked at Malaysian Airlines System Bhd and most recently at Riyadh Air, the Saudi startup airline.
Ireland-based Mark Breen is chief executive officer of consultancy Oneiros Aerospace and formerly led several small and mid-tier airlines including Saudi Arabian budget carrier flyadeal. He was also an executive at Oman Air, according to his LinkedIn profile.
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