LONDON: EasyJet Plc’s board is calling the overture by investment firm Castlelake LP “highly opportunistic” as the UK budget carrier grapples with a depressed stock price, cautioning that attempting a takeover would be fraught with risk.
The company said its board remains confident in the airline’s strategy given its cash position and profit outlook, according to a regulatory statement yesterday that followed Castlelake’s initial disclosure last Friday.
While there have been no discussions or proposals from Castlelake, the public display of interest comes at a vulnerable time for the company.
EasyJet shares have dropped by more 20% this year as the airline industry faces one of its most difficult periods, with soaring jet fuel prices bringing on uncertainty around demand for travel.
The investment firm said last Friday that it’s considering a possible offer, while cautioning that it’s possible no offer will materialise.
Under UK takeover rules, Castlelake is required to make an offer for EasyJet of at least 403.23 pence a share, based on the price it paid for its existing 2.14% stake.
The airline said there’s uncertainty around what it called “deliverability” on a bid given the “considerable regulatory, financial and other execution challenges associated with a potential takeover”.
The investment company has until June 26 to either make a formal offer or walk away,
Castlelake is an active player in the aviation space, having partnered in recent years with Air France-KLM to acquire Scandinavian airline SAS AB.
It’s also made loans to Virgin Atlantic Airways Ltd and Abra Group Ltd, the parent of Brazilian carrier Gol and Colombia’s Avianca.
It’s unclear whether Castlelake’s potential bid would be for the entire company.
EasyJet’s biggest shareholder is the family of its founder, Stelios Haji-Ioannou, that holds a 15.3% stake. About 70% of the shares are held by investment firms. — Bloomberg
