EasyJet rejects fourth takeover bid from US firm Castlelake – but raises hopes of deal
EasyJet has rejected a fourth bid of £4.9billion from US firm Castlelake, but left the door open to further offers.
The budget airline dismissed the latest offer – worth 650p a share – from Castlelake, saying it ‘substantially’ undervalued it.
But it raised hopes a deal would be made after it said it would provide Castlelake with ‘limited commercial information’, which may result in the bidder making ‘a more attractive proposal that better reflects the value of EasyJet and its prospects.’
It also said it had asked takeover regulators to extend a previous deadline for the firm to make an offer or walk away, from tomorrow (June 26) to July 5.
EasyJet is said to be holding out for at least 700p a share – or £5.3bn.
Castlelake has tabled four offers to the EasyJet board: 560p a share, 600p a share, 625p a share, and now 650p a share.
Flying high: Easyjet is said to be seeking a bid of 700p per share from Castelelake
Earlier this week, the airline accused Castlelake, which already owns a 2.14 per cent stake in the FTSE 250 airline, of trying to buy it ‘on the cheap’.
EasyJet said that it is still concerned about the ownership structure proposed by Castlelake and it expects a future offer to provide ‘satisfactory assurances and commitments’.
Castlelake had proposed it would make the purchase by forming a group that is owned 49 per cent by Castlelake and 51 per cent by EU citizens and potentially other undisclosed investors.
In a statement made later on Thursday morning, Castlelake said it welcomes EasyJet’s ‘constructive engagement’ and the nine-day extension on the ‘put up or shut up’ deadline.
It added that a further announcement ‘will be made as and when appropriate.’
Chris Beauchamp, chief market analyst at investing and trading platform IG, said: ‘Easyjet’s board might be making a decent showing of rejecting the Castlelake bid, the deadline extension has been taken as a sign that some kind of deal is doable.
‘Investors clearly expect a sweetened deal to come through, which accounts for the continued strength in the shares over the past week.’
EasyJet shares had taken a hit after it was battered by rising jet fuel bills and subdued demand due to the conflict in the Middle East. But takeover chatter has sent shares higher.
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