EasyJet shares rally 10% on potential $7.3 billion acquisition by Castlelake

Shares of easyJet rallied nearly 10% on Monday, after the Luton-based airline reached an ‘agreement in principle’ over the potential acquisition of the company by US-based investment firm Castlelake for $7.3 billion.

According to a report by Reuters, easyJet had stated on Sunday that it was prepared to accept Castlelake’s revised bid of £6.90 apiece, thereby concluding negotiations that have been going on for the past month, which could potentially reshape the aviation industry of Europe.

The latest bid was at a nearly 24% premium to easyJet's share price as of Friday's close. The shares of the British budget airline were up 9.75% at £6.12 as of 0810 ⁠GMT.


However, the deal with Castlelake has not been confirmed, as the firm needs to get the required approvals and regulatory clearances before the acquisition can move forward, as indicated by easyJet’s statement on Sunday.

As per British takeover rules, the investment firm needs to formalise the offer to the airline by August 3, 2026, or ‘walk away’.

With sharply higher fuel prices linked to the US-Iran conflict, this potential take-private deal comes at a challenging time for airlines. According to JPMorgan analysts cited by Reuters, concerns regarding how US-based Castlelake and the board of directors at easyJet would meet European Union ownership requirements and agree on a control structure remain, as the Union’s regulations require airlines operating in the bloc to be majority owned and controlled by EU nationals.

Castlelake had previously stated that it would own 49% of the bidding vehicle, with the remaining 51% to be held by former easyJet COO Peter Bellew and senior industry executive Mark Breen, who are both EU nationals.

However, prospects of a counter-bid remain open. While the agreed proposal price of $7.3 billion was close to investors’ feedback, approval from shareholders is not guaranteed, according to analysts cited in the Reuters report.

EasyJet had previously rejected four escalating bids of £5.60, £6.00, £6.25 and £6.50 offered by Castlelake, accusing the firm of being opportunistic and buying the airline “on the cheap”, according to a report by Bloomberg.