London: British budget airline EasyJet says it has reached an agreement in principle for a takeover by US private equity firm Castlelake after receiving a new enhanced proposal valuing the company at more than £5 billion ($6.7 billion).
EasyJet’s board said Castlelake’s fifth proposal was for £6.90 a share, which they were “minded to recommend” to shareholders if a strong offer is made by August 3, the deadline set for the deal.
Castlelake, which manages about $38 billion in assets, mainly in the aviation sector, had made four previous proposals, all rejected by EasyJet, the company known for its distinctive orange and white livery.
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The airline, founded by entrepreneur Stelios Haji-Ioannou in the 1990s when Europe’s budget airline sector was taking off, called the third bid “very opportunistic”, coming after its share price had fallen and the company’s losses mounted as the war in the Middle East drove up jet fuel costs.
According to Financial TimesCastlelake is a major player in aircraft leasing, with a fleet of 375 aircraft leased to airlines including Etihad, Qantas, Air India Express, Frontier and Viva.
In 2023, Castlelake bought about 32 percent of Scandinavian airline SAS. This share is in the process of being repurchased by Air France-KLM.
Despite rejecting early offers, EasyJet opened the door to talks on June 25, agreeing to give the US fund access to commercial information in the hope of securing a more attractive proposal.
“Castlelake has emphasized its immense respect for easyJet and its people, along with its commitment to supporting its future growth and transformation into a stronger and more resilient European airline,” the company said in its statement on Sunday.
“Castlelake is supportive of easyJet’s fleet modernization programme, which it considers essential to the Company’s long-term competitiveness, efficiency and sustainability objectives.”
But the statement warned “there can be no certainty that any firm offer will be made” by the August 3 deadline, which was pushed back from Sunday.
In May, EasyJet reported losses deepened by 27 percent in the first half of the financial year to £377m, as the US-Iran conflict drove up fuel prices and disrupted travel plans.
The company warned that the second half of the year would also be affected, although chief executive Kenton Jarvis said the airline was “well placed” to weather the turbulence.
Budget rival Ryanair, by contrast, enjoyed a 35 per cent rise in profit in its full-year return, although it too warned of future problems caused by the war in the Middle East.
