The board of easyJet plc and Minneapolis-based private credit and aviation investor Castlelake, L.P.  have reached an agreement in principle on the financial terms of a recommended cash takeover, valuing the UK-based low-cost carrier at £6.90 per share. 

The fifth proposal, tabled on July 4, following the rejection of four prior offers since June 12, values the airline’s issued and to-be-issued ordinary share capital at an equity value of approximately £5.2 billion to £5.5 billion on a fully diluted basis.

The £6.90 cash offer represents a 23% premium over easyJet’s closing share price of 558.2p on Friday July 3 and the airline’s shares rose by nearly 10% to £6.20 when markets opened this morning.

Castlelake initially disclosed its strategic interest to UK regulators on May 29, subsequently submitting a private opening proposal of £5.60 per share on June 12. 

The easyJet board rejected this initial approach, alongside successive bids of £6.00 on June 17, £6.25 on June 20, and £6.50 on June 23, dismissing the early offers as “opportunistic” attempts to leverage a depressed equity valuation. The stock had previously fallen to an annual low of £3.69, driven by European operational challenges and escalating Jet A-1 costs resulting from the geopolitical conflict involving Iran, which highlighted the carrier’s structural fuel cost exposure.

 Following the rejection of the fourth proposal at £6.50 per share, the board granted Castlelake limited access to internal commercial data, a concession that prompted the improved fifth proposal.

 The board concluded that these updated financial terms reached a valuation level it is likely to recommend to shareholders, provided a firm intention to make an offer is announced under Rule 2.7 of the City Code on Takeovers and Mergers.

 The UK Takeover Panel has granted an extension to the Put Up or Shut Up deadline. Castlelake must now announce a firm intention to bid under Rule 2.7, or walk away under Rule 2.8, by 17:00 BST on August 3. The non-binding proposal remains conditional on satisfactory confirmatory due diligence and the finalisation of definitive transaction documentation.

 Shareholders have been advised to take no action. Castlelake retains the right to reduce the offer price if easyJet declares or pays further dividends or distributions before transaction completion. It also reserves the right to modify the offer terms or withdraw the equity alternative if a competing bidder emerges, or with easyJet board consent.

A completed transaction would result in the delisting of easyJet from the London Stock Exchange. The primary regulatory hurdle relates to European Union airline ownership and control regulations, which mandate that carriers operating within the bloc remain at least 51% owned and controlled by EU nationals.

To satisfy this requirement, the bidding vehicle incorporates EU-based co-investors Brookfield Asset Management, former easyJet chief operating officer Peter Bellew, and Mark Breen. Together with other EU nationals, they will hold a 51% controlling stake in the acquisition vehicle, while Castlelake and its affiliates retain 49%. Castlelake has committed to a “best endeavours” obligation to secure all necessary regulatory clearances.

Castlelake also confirmed its support for easyJet’s existing fleet modernisation programme, validating the transition to next-generation, fuel-efficient narrowbodies as a critical cost-control mechanism amid volatile global fuel pricing. The transaction structure includes a partial unlisted share alternative, allowing existing investors to roll their equity into the private holding company.

 This mechanism enables easyJet founder Sir Stelios Haji-Ioannou, whose family controls a 15.3% stake, to maintain his equity exposure and preserve existing brand royalty agreements under the private corporate structure.