EasyJet bid: board rejects 625p, keeps Castlelake in play

EasyJet rejected Castlelake’s fourth takeover proposal at 625p a share on Wednesday, valuing the budget airline at about £4.93 billion ($6.5 billion), but left the buyer with a way back in. The board granted the US investment firm limited access to the airline’s books and more time before a July 5 deadline, according to Reuters. Shares rose as much as 5.9 per cent to 571.4p after Bloomberg reported that directors remained willing to talk if the price improved.

For Castlelake, the message was awkward. EasyJet is not accepting 625p. It is also not telling the bidder to leave. The bid remains in the zone where price, financing and legal structure can still change.

The price path has already shifted from a simple rebuff to a negotiation with a number on it. Castlelake went public at the weekend after EasyJet pushed back on a roughly £4.7 billion approach and accused the bidder of trying to buy the airline “on the cheap”. Reuters reported on June 22 that some investors wanted at least £600 million more before the board should engage. The newest proposal moves closer to that level, though directors still say the airline is worth more.

Investors are pricing in that uncertainty. EasyJet traded as high as 571.4p after the report, still well below the proposed offer price. The gap suggests a market that sees bid tension without treating a takeover as likely. Some of that spread is price risk. Some is execution risk.

Deliverability may now matter as much as the headline bid. Bloomberg’s reporting said EasyJet was examining who would own the airline if Castlelake succeeded, a point tied to European aviation ownership rules. The bidder is said to need EU nationals in its consortium to meet those restrictions, so a higher number would not be enough without a structure the board can defend. Former EasyJet chief operating officer Peter Bellew is part of the group, Bloomberg said, giving Castlelake an operating name alongside the financing. That helps the bidder’s presentation. It does not answer the control question.

The board’s language kept that pressure on Castlelake. EasyJet said further access “might produce a more attractive proposal that better reflects” the airline’s value, wording that sounds less like a final rejection than a price marker. Castlelake has argued that the airline has not engaged meaningfully enough. Both sides are trying to shape the shareholder reading before the deadline arrives.

Shareholder pressure is part of the calculation because the ownership register is not fully dispersed. Bloomberg said the family of founder Stelios Haji-Ioannou holds 15.3 per cent of EasyJet, a stake large enough to matter if other investors press for talks. Castlelake’s decision to publicise its approaches can concentrate that pressure on the board. It also raises the burden on Castlelake to bring back an offer it can close, rather than a public price the board can dismiss as undeliverable.

July 5 is the next hard stop under the takeover timetable cited by Reuters and the BBC. Castlelake must either return with a firm offer or walk away. EasyJet has said 625p is not enough, while its access decision leaves room for a better bid.