easyJet rebuffs Castlelake's £4.9bn bid but opens its books to the US suitor

easyJet has rejected a fourth takeover approach from the US investment firm Castlelake, dismissing the sweetened 650-pence-a-share proposal as an opportunistic undervaluation of Europe's second-largest low-cost carrier. Yet in the same breath the airline's board agreed to open its books to the suitor and to extend the deadline for a firm bid, signalling that one of the most closely watched contests in European aviation is far from settled.

The proposal, received on 23 June and rebuffed on 25 June, valued easyJet at roughly £4.93bn (about $6.5bn). It was the latest in a rapid sequence of cash offers — 560p, 600p and 625p a share — that the board had already turned down. Castlelake, a Minneapolis-based firm managing about $38bn and a heavyweight in aviation finance, had taken its 625p offer public on 22 June after what it described as the board's reluctance to engage.

Why the board said no

easyJet's directors rejected the approaches unanimously, arguing they fail to reflect the carrier's recovery potential. The board said the earlier offer was an attempt to buy the airline cheaply during an industry downturn.

The Board believes that the Third Proposal represents an opportunistic attempt to acquire easyJet 'on the cheap' and that it is therefore not in the best interests of easyJet shareholders.

Of the fourth proposal, the board said it continued "substantially undervaluing the Company and its prospects and continuing to give rise to significant questions of deliverability." Directors also voiced "considerable reservations" about the bid's ownership structure, leverage and conditionality.

The timing is central to the dispute. easyJet's shares had slid and its losses widened after the Middle East conflict drove up jet-fuel costs, depressing the valuation against which Castlelake's premium is measured. On that pre-bid benchmark of 29 May, the 625p offer represented a premium of roughly 57% to 59%, according to figures reported by Reuters and Euronews. The board contends that snapshot flatters the bid by capturing the airline at a cyclical low.

An open door, not a closed deal

Crucially, easyJet did not slam the door. It agreed to give Castlelake access to "limited commercial information" that it said might yield a "more attractive proposal," and the UK Takeover Panel extended the "put up or shut up" deadline by nine days, from 26 June to 5pm on Sunday 5 July. Under UK rules, Castlelake must by then either announce a firm intention to bid or walk away for six months.

Markets read the move as a thaw. easyJet shares jumped as much as 8% on 25 June to around £5.66–£5.80, their highest in nearly a year, though still well below the 650p offer — a gap that suggests investors are not yet convinced a deal will complete at that level.

"The narrative has definitively changed," said Dudley Shanley, an analyst at Goodbody Stockbrokers, who said the company was now effectively in negotiations. Some shareholders are pushing for more: investors including Oldfield Partners have signalled that any firm offer must be significantly higher, with reports of demands around £7 a share.

The structure and the founder

To satisfy European and UK rules requiring airlines to be majority-owned by EU or domestic nationals, the consortium is structured so that EU nationals — including the Irish aviation veteran Peter Bellew — would hold 51%, with Castlelake and co-investors such as Brookfield Asset Management taking 49%. The board's misgivings about that arrangement are among the obstacles to any agreed deal.

One voice has stayed conspicuously quiet: Sir Stelios Haji-Ioannou, who founded easyJet in 1995. His family remains the largest individual shareholder with about 15% and also owns the rights to the easyJet brand name — leverage that would make his backing close to essential for any takeover. He has so far made no public comment on the approaches.

What a buyout would mean for fares

For travellers, including the many in the Greater Region who rely on short-haul links across Europe, the contest matters beyond the boardroom. A private-equity grab of a major low-cost carrier would test how much consolidation pressure Europe's budget-airline market can absorb without dulling the competition that keeps fares low.

The crown jewels are easyJet's airport slots — valued by analysts at around £1bn, roughly half of that at London Gatwick, with further holdings at Luton, Geneva, Paris and Amsterdam. A rational owner would have every incentive to protect those assets, since cancelled routes erode their value. But analysts caution that a financially driven owner focused on returns could rein in growth and new aircraft deliveries, easing the competitive squeeze that low-cost carriers exert on legacy rivals. Competition authorities, meanwhile, would almost certainly block easyJet's nearest rival, Ryanair, from absorbing the Gatwick slots.

For now, the next move belongs to Castlelake. With the books partly open and the clock running to 5 July, the firm must decide whether to raise its offer to a level the board — and Stelios — could accept, or to retreat for at least six months. The outcome will shape not only easyJet's ownership but the broader question of whether Europe's short-haul skies are about to enter a new round of buyout-driven consolidation.