Shares of easyJet climbed sharply in early Monday trading after the British low-cost carrier gave its backing to a £5.5 billion — roughly $7.34 billion — acquisition proposal from U.S. investment firm Castlelake, which was announced over the weekend.
The airline indicated Sunday that it was willing to accept Castlelake’s revised offer of £6.90 per share, a move that could bring an end to drawn-out negotiations and potentially transform the European airline industry. By 7:20 a.m. GMT Monday, easyJet’s stock had climbed 10.9% to £6.18.
The proposed bid represents a premium of nearly 24% above where easyJet’s shares closed the previous Friday.
The potential deal, which would take the airline private and includes a partial equity option for shareholders, arrives at a difficult moment for the aviation sector. Airlines are currently dealing with significantly elevated fuel costs and tightening profit margins tied to tensions surrounding the Iran conflict.
Analysts at JPMorgan raised questions about how Castlelake — an investment firm focused on aviation — and easyJet’s board would navigate European Union ownership rules and settle on a governance arrangement. The position of founder and major shareholder Stelios Haji-Ioannou also remains uncertain.
On Sunday, easyJet confirmed that Castlelake had committed to a “best endeavours” pledge to secure all necessary regulatory approvals.
Castlelake has previously stated it would hold a 49% stake in the acquiring entity, with the remaining shares held by two EU nationals: Peter Bellew, a former CEO of Malaysia Airlines and former chief operating officer of easyJet, and senior industry figure Mark Breen. The arrangement is designed to satisfy EU regulations requiring that airlines flying within the bloc be majority-owned and controlled by EU nationals.
JPMorgan’s analysts also cautioned that while the proposed price aligns closely with investor expectations, shareholder approval is far from certain. The door also remains open for a competing offer, or for other carriers to pursue portions of easyJet’s business.
This latest bid marks the fifth attempt by Castlelake. EasyJet had previously turned down four earlier proposals, dismissing them as opportunistic efforts to acquire the airline at a discount and expressing reservations about the proposed governance structure.
Under British takeover regulations, Castlelake must either formalize its offer or withdraw by August 3.
