EasyJet said Sunday it would accept a £5.5 billion takeover offer from Castlelake, a Minneapolis-based investment firm, ending weeks of negotiations over the sale of Britain's largest budget airline.
Under the agreement in principle, Castlelake will pay £6.90 per share for easyJet, up from its initial £5.60 offer and from a £6.50 proposal rejected 10 days earlier. The deal would take the publicly traded airline private.
EasyJet founder Stelios Haji-Ioannou and his family stake stand to gain nearly £800 million from the transaction. Chair Stephen Hester, the former Royal Bank of Scotland executive, negotiated terms that fell short of the above-£7-per-share price some shareholders sought.
Castlelake, founded by American banker Rory O'Neill, specializes in asset-based lending and aircraft leasing. The firm is currently divesting a stake in Scandinavian Airlines following a debt restructuring. Analysts have noted that easyJet's fleet could integrate with Castlelake's leasing operations, while the airline's profitable holidays arm could be spun off.
EasyJet employs 19,000 people across 164 airports in 38 countries. Castlelake expressed "tremendous respect for easyJet and its people" in a joint statement but made no binding commitments regarding headcount or working conditions.
EasyJet faced pressure from two profit warnings in spring, declining bookings and macroeconomic headwinds including fuel costs. The airline competes against Ryanair, Wizz Air and Jet2 in a segment with thin margins and volatile commodity prices.
Castlelake has said it will establish a European holding company with EU national directors to comply with airline ownership rules. Named directors include Peter Bellew, former chief operating officer at easyJet, Riyadh Air and Ryanair, and Mark Breen, CEO of Oneiros Aerospace.
Evercore is advising easyJet on the transaction, while Goldman Sachs is advising Castlelake.
Castlelake must either formalize the offer or walk away by Aug. 3 at 5 p.m. The deal is expected to close by the specified deadline, pending shareholder approval and regulatory clearance.
