easyJet has rejected a £4.74 billion (US$ 6.3billion) takeover proposal from US investment firm Castlelake, describing the offer as opportunistic and arguing that it significantly undervalues the airline.
Castlelake disclosed the proposal after three approaches were rejected by easyJet's board. The latest bid offered shareholders 625 pence per share in cash, representing a premium of about 24% over the airline's closing share price before the proposal became public.
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The Minneapolis-based investment company, which manages about US$ 36 billion in assets and already holds a 2.14% stake in easyJet through funds under its management, said it decided to publicize the proposal because the airline's board had declined to engage with the offer.
According to Castlelake, the transaction would create a stronger and more resilient airline while preserving compliance with European ownership rules. European Union regulations require airlines operating within the bloc to remain majority-owned and controlled by EU nationals.
To address those requirements, Castlelake said it partnered with aviation executives Peter Bellew, a former executive at Ryanair, easyJet and Riyadh Air, and Mark Breen, chief executive of Ireland-based Oneiros Aerospace. Under the proposed structure, an EU-controlled entity would hold a controlling stake in the airline.
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easyJet questioned the ownership arrangement and said the proposal was based on a share price that had been affected by geopolitical uncertainty and short-term market conditions.
"The board believes that the third proposal represents an opportunistic attempt to acquire easyJet on the cheap," the airline said in a statement.
The carrier added that Castlelake's valuation relied heavily on earnings forecasts and share price comparisons that did not fully reflect easyJet's long-term prospects.
Castlelake first approached the airline earlier this month with an indicative proposal valuing easyJet at approximately £3 billion. The investment firm subsequently increased its offer twice, first to 560 pence per share and then to 600 pence, before submitting the latest 625 pence proposal.
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The bid comes after a difficult period for easyJet shares, which had fallen about 20% since the start of the year before takeover speculation emerged. News of Castlelake's interest helped lift the stock, which has gained more than a third over the past month.
Under UK takeover rules, Castlelake has until June 26 to announce a firm intention to make an offer or withdraw its interest.
The approach is the latest takeover attempt involving easyJet in recent years. The airline rejected an approach from rival low-cost carrier Wizz Air in 2021, while reports last year suggested shipping giant MSC had also explored a potential acquisition.
