Easyjet takeover: Airline could be broken up

Budget airline Easyjet has reached a principal agreement to be acquired by US investor Castlelake, following the latter's fifth offer. The deal values the airline at 5.2 billion British pounds and could transfer ownership of one of Europe's major low-cost carriers to American hands.

This potential takeover raises questions about the future of Easyjet and the broader European air transport market. While Easyjet is formally registered in Austria through its subsidiary Easyjet Europe Airline GmbH, established in 2017 to maintain EU flight operations post-Brexit, its operational significance in Austria is limited. The airline maintains 141 aircraft registered in Austria, far exceeding the 66 aircraft of Austrian Airlines, but its primary focus remains elsewhere.

After weeks of negotiations and several rejected proposals, Castlelake's fifth offer is expected to proceed. The initial offer was 5.60 pounds per share, and a more recent offer of 6.50 pounds per share was rejected as undervaluing the company. The latest offer of 6.90 pounds per share, made on Sunday evening, led to a significant stock market reaction. Easyjet's share price surged over 10% on Monday, reaching its highest level in four and a half years, closing at 6.16 pounds after being at 5.58 pounds on Friday.

Easyjet, listed on the UK's FTSE 250 index, has indicated its willingness to accept the 6.90 pounds per share offer. The transaction could yield nearly 800 million pounds for Easyjet founder Stelios Haji-Ioannou, who, along with his family, still holds a 15% stake in the company. However, the acquisition is not yet finalized. Castlelake has until August 3rd to submit a binding offer or withdraw from negotiations. The US company plans to collaborate with aviation managers Peter Bellew and Mark Breen to facilitate the takeover.

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The airline is ready to accept an offer of 6.90 pounds per share.