EasyJet has moved a step closer to a potential takeover after reaching an agreement in principle with US investment firm Castlelake on a proposed acquisition valued at approximately £5.2 billion.
The announcement follows months of negotiations during which the budget airline repeatedly rejected lower offers, arguing they significantly undervalued the company.
Proposed Offer Values Shares at £6.90
Under the latest proposal, Castlelake has indicated it is prepared to pay £6.90 per EasyJet share, a price higher than its four previous bids.
The investment firm had earlier offered between £5.60 and £6.50 per share, proposals that EasyJet’s board dismissed while accusing the bidder of attempting to acquire the airline at an unfairly low valuation.
The airline said on Sunday that its board considers the revised financial terms sufficiently attractive that it would be inclined to recommend the offer to shareholders if a formal bid is ultimately submitted.
Deal Still Faces Multiple Approvals
Despite the preliminary agreement, the acquisition has not yet been finalized.
Castlelake must still obtain regulatory approvals and satisfy the conditions required before a binding takeover can proceed.
The investment company has until 5:00 p.m. BST on August 3 to either announce a firm intention to make an offer or formally withdraw its interest under UK takeover rules.
Should a formal proposal be made, EasyJet shareholders would also need to approve the transaction.
European Ownership Rules Present Major Challenge
One of the most significant obstacles remains compliance with European Union ownership regulations governing airlines.
Because EasyJet operates as a European airline, EU rules require that at least 51% of the company remains under European ownership and control.
Castlelake, which is headquartered in the United States, has previously outlined plans aimed at meeting those regulatory requirements should the takeover proceed.
Airline Cites Strong Long-Term Prospects
In announcing the agreement in principle, EasyJet said Castlelake had expressed confidence in the airline’s future and its workforce.
According to the company, the investment firm has pledged to support EasyJet’s continued growth while strengthening its position as a resilient European carrier.
EasyJet has previously argued that its market valuation has been temporarily weakened by broader pressures affecting the travel industry, including geopolitical tensions linked to the conflict involving the United States, Israel and Iran.
EasyJet Remains a Major European Carrier
Headquartered in Luton, EasyJet is one of Europe’s largest low-cost airlines, employing more than 19,000 people and operating approximately 1,200 routes across 35 European countries.
The company’s shares closed at £5.58 on Friday, well below the proposed takeover price.
Before reports of Castlelake’s initial approach emerged in June, EasyJet’s stock had declined by more than 30% over the previous year.
Castlelake Expands Interest in Aviation Sector
Castlelake currently manages approximately $36 billion in assets and already holds an interest in EasyJet through investment funds controlling around 2.14% of the airline.
The latest proposal marks a significant increase over its earlier bids and signals the firm’s continued determination to acquire one of Europe’s largest budget carriers.
Whether the transaction proceeds will now depend on regulatory reviews, shareholder approval, and Castlelake’s decision on whether to submit a formal takeover offer before next month’s deadline.
