EasyJet shares rose as much as 12.5% on Monday after the British low-cost carrier said it would review any takeover proposal from Castlelake, while calling the timing of the US investment firm’s interest “highly opportunistic,” Reuters reported.
Castlelake said on Friday it was in the early stages of considering a possible offer for EasyJet, but said no approach had been made to the airline’s board and that there was no certainty a bid would follow.
Under UK takeover rules, Castlelake has until June 26 to either announce a firm offer or withdraw.
EasyJet said it would assess any proposal if one is made, but argued that its current share price has been depressed by the Iran war, higher fuel prices, regulatory issues and other short-term pressures.
The airline’s shares had fallen more than 22% this year before Castlelake’s interest became public. Monday’s rise lifted EasyJet’s market value to about £3.39 billion.
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Castlelake is a US alternative investment firm specializing in asset-based private credit. The company says it manages about $37 billion in assets and has a dedicated aviation leasing and lending business that provides financing to airlines and aircraft owners.
The firm disclosed on Monday that it holds a 2.14% stake in EasyJet, making it one of the airline’s largest shareholders.
A full takeover could face regulatory complications because EasyJet is a UK airline with extensive operations across Europe. Ownership and control rules in the UK and European Union can limit the ability of non-European investors to control airlines operating under local traffic rights.
Fleet of 364 Airbus narrowbody jets
The interest in EasyJet comes after a long period of weak share performance. Castlelake may also be looking at the value of the airline’s aircraft, delivery slots and airport positions rather than only its current earnings.
Gridpoint, an aviation consultancy, said in an analysis that EasyJet’s owned fleet, cash position, Airbus A320neo and A321neo order book and slots at constrained airports could give the company a sum-of-the-parts value above its market capitalization.
EasyJet operates a fleet of 364 Airbus narrowbody aircraft, including 102 neo-family jets. The carrier also holds one of the industry's largest outstanding Airbus order books, factors that analysts believe may have contributed to Castlelake's interest.
The consultancy estimated that EasyJet’s aircraft and spares could be worth about £5.2 billion and suggested that its future Airbus delivery positions and purchase rights could carry significant value because of aircraft supply constraints.
Gridpoint also pointed to EasyJet’s slot holdings at airports such as Gatwick, Amsterdam, Orly, Linate and Lisbon, although it cautioned that airport slot values are difficult to estimate and not always easy to monetize.
EasyJet has not received a formal offer from Castlelake. The airline said its board remains confident in its current strategy and ability to deliver long-term shareholder value.
