It came as easyJet rejected a fourth takeover proposal from Castlelake worth £6.50 per share in cash. The latest proposal, which followed the rejection by easyJet of approaches worth £6.25, £6 and £5.60 per share in cash, included a “partial alternative for easyJet shareholders to elect for unlisted, non-transferrable, non-voting shares in a vehicle within Castlelake’s proposed structure”. The bidding vehicle would be 49% by Castlelake and co-investors such as Brookfield Asset Management and 51% of EU nationals including Peter Bellew and Mark Breen.
The easyJet board unanimously rejected the fourth approach for “substantially undervaluing the company and its prospects”, adding that it continues to “give rise to significant questions of deliverability”.
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However, the easyJet board told the stock market that “giving Castlelake access to limited commercial information, as Castlelake sought in the letter which contained the fourth proposal, might produce a more attractive proposal that better reflects the value of easyJet and its prospects and the interests of shareholders thereto”.
The statement added: “The board continues to be concerned about the ownership structure and deliverability of any offer from Castlelake, and the time it will take, with the consequent meaningful impact on the present value of the offer price, to satisfy necessary conditions. The board has informed Castlelake that it would expect satisfactory assurances and commitments in these regards.”
Castlelake, which has a 2% stake in easyJet, made its first approach for the airline at the start of June, following a period under which airline stocks had come under pressure because of complications that arose from the conflict in the Middle East.
But more recently airline share prices have begun to recover amid hopes a peace deal will be struck between the US and Iran.
The easyJet share price is now higher than it was immediately before hostilities broke out in the Middle East on February 28, and ended the day up 6.56%, or 35.4p, at 575p.
“It is easy to see why American investment group Castlelake tried to pounce on EasyJet at the start of June, given how spring’s pair of profit warnings, an unhelpful macroeconomic backdrop and a diminished share price left the airline’s shares and valuation very depressed,” said Russ Mould, investment director at AJ Bell.
“An improved bid (a fourth overall) is yet to break EasyJet’s resolve to resist the predator’s overtures, but the agreement to open its books suggests that the target’s management may be open to a deal if the price is right. Although the airline’s founder, Sir Stelios Haji-Ioannou, will have a major say given his 15.3% stake.”