British low-cost carrier EasyJet has rejected a €5.9 billion (£5 billion) takeover proposal from US private equity firm Castlelake, dismissing the approach as "highly opportunistic" despite the offer representing a significant premium to the airline's recent share price.
The rejection follows three informal proposals made by Castlelake, with the latest valuing EasyJet shares at £6.25 each, approximately 59% higher than the carrier's market value before the private equity firm publicly disclosed its interest in May.
Castlelake confirmed on Monday that it remains interested in acquiring the airline and has now appealed directly to shareholders to consider the merits of its proposal after failing to secure the support of EasyJet's board.
Under UK takeover regulations, Castlelake has until Friday to submit a formal offer or withdraw its interest, which would prevent the firm from making another approach for six months unless specific conditions are met.
EasyJet's board reiterated its opposition to the proposal, arguing that the offer significantly undervalues the airline's long-term prospects and comes at a time when external factors have temporarily weighed on its financial performance.
In a statement, the company said the bid failed to reflect the underlying strength of the business and its future growth potential.
"The Board remains highly confident in EasyJet's strategy and its ability to deliver attractive long-term value for shareholders," the airline said.
The company noted that its recent share price weakness and increased losses were largely influenced by a sharp rise in jet fuel costs following the conflict in the Middle East, which has placed pressure on airlines worldwide.
The aviation industry has faced renewed challenges in recent months as geopolitical tensions disrupted energy markets and drove fuel prices higher, increasing operating costs across the sector.
Despite those headwinds, EasyJet has continued to focus on strengthening its network, expanding holiday offerings, and improving profitability as travel demand remains resilient across many European markets.
Castlelake's latest proposal values the airline at nearly €5.9 billion and represents one of the most significant potential acquisitions in the European aviation sector this year.
The investment firm believes the offer provides an attractive opportunity for shareholders amid ongoing uncertainty facing the airline industry. However, market reaction suggests investors remain skeptical about the likelihood of a successful takeover.
EasyJet shares rose 3.4% on Monday to £5.21, remaining well below Castlelake's proposed offer price.
According to Dan Coatsworth, Head of Markets at AJ Bell, the gap between the market price and the proposed acquisition value indicates that investors are not fully convinced the transaction will proceed.
"The market doesn't believe Castlelake will succeed, given how the shares are trading significantly below the latest bid," Coatsworth said.
The takeover interest comes as airlines continue to navigate a complex operating environment marked by fluctuating fuel prices, economic uncertainty, and changing consumer travel patterns.
For EasyJet, the board's rejection signals confidence in its standalone strategy and belief that the airline can generate greater shareholder value independently than under the terms currently proposed by Castlelake.
Attention will now turn to whether the US private equity firm decides to submit a formal offer before the regulatory deadline later this week.
