Private equity firm Castlelake is appealing directly to Easyjet investors after the FTSE 250 budget airline rejected its third successive takeover approach over the weekend.
Castlelake went public on Monday, criticising Easyjet’s “unwillingness to engage meaningfully” following what the firm described as three consecutive rebuffed bids.
The most recent offer, tabled on Saturday, valued Easyjet shares at £6.25 each, a significant premium above the airline’s Friday closing price of £5.04.
This latest bid followed two earlier approaches at £5.60 and £6 per share respectively, both of which Easyjet also declined to pursue.
Having failed to secure a private agreement, Castlelake is now encouraging Easyjet shareholders to “provide their views” directly to the airline’s board in support of the proposal.
The private equity firm argues that its £6.25 offer “substantially de-risks the execution of the Company’s business plan” at a challenging time for the carrier.
Castlelake’s latest bid represents a 59 per cent premium over Easyjet’s share price when the first offer was made, and a 71 per cent premium on the airline’s share price at its April interim trading update.
At that April update, Easyjet revealed it was forecasting a pre-tax loss of between £540m and £560m, as Middle East conflict closed travel routes and raised fears of a jet fuel shortage.
Announcing those results, chief executive Kenton Jarvis said: “Our first half financial performance worsened year on year, impacted by the conflict in the Middle East and the competitive environment in some markets.”
Jarvis added: “Following our busiest Easter holiday period ever, the operational ramp up into peak summer continues as planned.”
Easyjet has defended its decision to reject the bids, accusing Castlelake of “highly opportunistic timing” and arguing the firm was seeking to capitalise on a temporarily depressed share price.
The airline stated its share value was “temporarily depressed due to the current situation in the Middle East and its impact on customer confidence and jet fuel prices.”
Easyjet’s shares had fallen roughly 20 per cent since the start of the year to 396p, though the stock has since recovered significantly to around 504p, representing a two per cent year-on-year decline.
Castlelake is asking Easyjet shareholders to make their views known before 5pm on 26 June, the deadline by which the bidder must either lodge a formal offer or withdraw entirely from the process.