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Budget airline EasyJet has described a potential takeover bid from a US investment fund as “highly opportunistic,” amid a significant decline in its share price. The fund in question, Castlelake, disclosed late on Friday that it was exploring the possibility of making an offer for the Luton-based airline but had not formally contacted EasyJet’s board. Castlelake currently holds approximately 2.14% of EasyJet’s shares through funds it manages and has estimated the airline’s value at a minimum of £3.06 billion ($3.89 billion).
EasyJet attributed the timing of the takeover interest to the pressures facing the aviation sector, specifically citing concerns associated with the ongoing conflict in the Middle East. The airline stated, “The board notes the 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.” The American fund indicated that any offer it makes would be at a price of no less than 403.23p per share. On Friday, EasyJet shares closed at 398p before the news broke, and they subsequently jumped by up to 12% in early trading on Monday.
Despite this recent surge, EasyJet’s stock has experienced a more than 30% decline over the past year before the takeover interest was made public. The company also highlighted the significant regulatory, financial, and operational challenges involved with a possible acquisition, although it emphasized its responsibility to enhance shareholder value by stating it would consider any formal proposal if received. Under UK takeover regulations, Castlelake has until 5:00 pm BST on 26 June either to present a binding bid or withdraw from the process.
Castlelake, which manages assets totaling roughly £27 billion ($36 billion), has been involved in previous aviation sector deals. Earlier this year, it engaged in discussions regarding a potential acquisition of the bankrupt US carrier Spirit Airlines. The firm also played a role in rescuing the failed Scandinavian Airlines (SAS) before selling its stake to Air France-KLM. Meanwhile, EasyJet’s interim financial results revealed lower summer flight bookings compared to the previous year, a trend it links to uncertainty caused by the Middle East conflict. The airline reported a half-year pre-tax loss of £552 million ($700 million), widening from a loss of £401 million ($510 million) recorded a year before
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