EasyJet shares soar as it becomes a target for a takeover swoop
EasyJet saw its shares soar 10 per cent today as it was confirmed as the target for a takeover bid.
The airline faces a swoop by private equity giant Castlelake, as it capitalises on a slump in easyJet’s share price – caused by rising fuel bills and disruption from the war in Iran.
US firm Castlelake confirmed it was in ‘the early stages’ of considering an offer for easyJet but that it had not yet approached the company’s board.
It added that there was no certainty it would make an offer for the FTSE 250 airline or what the terms of any bid would be.
The board of easyJet said that Castlelake’s move involved ‘highly opportunistic timing when easyJet’s share price is temporarily depressed due to the current situation in the Middle East and its impact on customer confidence and jet fuel prices’.
Under the London stock market’s takeover rules, Castlelake, which has around $36 billion in assets and is controlled by Canadian fund management giant Brookfield, now has until 5pm on June 26 to make a formal offer for easyJet or walk away.
EasyJet has been knocked off course by the conflict in the Middle East and is now a takeover target
The move comes after a slump in easyJet’s share price, which has fallen by 23 per cent so far this year as the industry has grappled with soaring fuel costs after the war in the Middle East disrupted supplies through the vital Strait of Hormuz.
Earlier this month, easyJet reported that its losses for the six months to March had widened to £552 million from £394 million in the same period last year, which it partly blamed on £25 million in extra fuel spending as prices rocketed.
It pushed the company to announce that it would need to raise ticket prices over the summer to offset the effects of rising costs.
Castlelake is already a major player in the airline business. The firm previously held a major stake in Scandinavian carrier SAS and earlier this year was touted as a potential buyer for no-frills US airline Spirit before it went bust. The firm has also previously leased aircraft to carriers including Delta and Qatar Airways.
It is not the first time easyJet has been the subject of takeover speculation. In 2021, the Luton-based airline rejected an unsolicited approach from its rival Wizz Air after the industry was laid low by the Covid-19 pandemic.
If it did decide to bid for the company, Castlelake could face a potential stumbling block in the form of easyJet’s founder Sir Stelios Haji-Ioannou, whose family are the airline’s largest shareholders with a stake of just over 15 per cent.
But the firm’s interest is likely to sound alarm bells that another major company could exit the London stock market following a series of takeovers.
Last week, FTSE 250 hotel group PPHE, the owner of Park Plaza, announced a £930 million approach from Israeli group Fattal.
Other recent bids include a £2.7 billion offer for ingredients maker Tate & Lyle tabled by US rival Ingredio while Spire Healthcare, the UK’s biggest private hospital operator, recently fielded a £1 billion offer from its second-largest shareholder Toscafund.
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