EasyJet shares jump almost 10% after it agrees £5.5bn takeover bid
✓Shares in easyJet surged nearly 10% after the airline agreed to a £5.5bn takeover at the fifth attempt, but analysts said that it showed UK firms were being bought on the cheap.
The low-cost carrier’s board will recommend shareholders accept an offer price of £6.90 a share from Castlelake, a US private equity firm, after rejecting four previous bids of as little as £5.60 per share. EasyJet shares closed at 610p.
Castlelake will have to table a formal bid by 3 August under City takeover rules.
It signalled it would back easyJet’s current strategy and was not looking to break up the company in a joint announcement from the airline and its putative new owners on Sunday evening.
EasyJet said that in discussions, Castlelake had “emphasised its tremendous respect for easyJet and its people, along with its intention to support its future growth and transformation to a stronger, more resilient European airline for the benefit of all stakeholders if the transaction proceeds to completion”.
It said Castlelake was “supportive of easyJet’s fleet modernisation programme, which it regards as central to the company’s long-term competitiveness, efficiency and sustainability objectives”.
The latest offer also allows current shareholders to remain invested under Castlelake’s ownership should the deal proceed, rather than being forced to divest when it delists.
The airline’s largest single shareholder, its founder, Stelios Haji-Ioannou, who still owns about 15% of the company along with his family, has yet to comment publicly on the bid.
City analysts said the deal would raise more concerns about London-listed UK firms being picked off by foreign buyers.
The brokerage firm XTB’s research director, Kathleen Brooks, said “an iconic British aviation name” would be put in US hands. “This deal is symbolic, as it suggests a lack of stock market growth, and persistent underperformance of UK equities means that there is a massive for sale sign above UK corporates,” she said.
The chief investment commentator at the financial services firm Charles Stanley, Garry White, said: “The number and size of takeover bids from overseas buyers suggest that many UK-listed companies remain significantly undervalued. It is clear UK companies are currently being sold off on the cheap.”
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Andrew Lobbenberg of Barclays, however, said the bid price was “offering good value to shareholders” as well as an opportunity for Castlelake, with markets tending to undervalue firms ahead of large capital investment.
“We do not expect a radical change in the business plan of easyJet. We expect that Castlelake will continue to develop the holidays business and grow the airline modestly,” he said.
EasyJet, which has its headquarters at London Luton airport but is predominantly based at Gatwick, employs 19,000 people and flies about 93 million passengers a year. Its shares had fallen by about 30% in the past year before Castlelake’s bid interest emerged.
Read the full story at BBC ↗ · The Guardian ↗
EasyJet has agreed in principle to a £5.5bn takeover by Castlelake, a US private equity firm, at £6.90 per share after rejecting four previous bids. The airline's share price rose nearly 10% following the announcement. Castlelake has signalled it will support easyJet's current strategy, including fleet modernisation, and will not break up the company. Shareholders will retain the option to remain invested after delisting. The formal bid must be tabled by 3 August under UK takeover rules. Analysts are split on the deal's implications: some view it as evidence that UK-listed companies are undervalued and being acquired by foreign buyers at depressed prices, while others contend the offer price represents fair value given market conditions and growth prospects.
Read the full story at BBC ↗ · The Guardian ↗
Shares in easyJet surged nearly 10% after the airline agreed to a £5.5bn takeover at the fifth attempt, but analysts said that it showed UK firms were being bought on the cheap.
The low-cost carrier’s board will recommend shareholders accept an offer price of £6.90 a share from Castlelake, a US private equity firm, after rejecting four previous bids of as little as £5.60 per share. EasyJet shares closed at 610p.
Castlelake will have to table a formal bid by 3 August under City takeover rules.
It signalled it would back easyJet’s current strategy and was not looking to break up the company in a joint announcement from the airline and its putative new owners on Sunday evening.
EasyJet said that in discussions, Castlelake had “emphasised its tremendous respect for easyJet and its people, along with its intention to support its future growth and transformation to a stronger, more resilient European airline for the benefit of all stakeholders if the transaction proceeds to completion”.
It said Castlelake was “supportive of easyJet’s fleet modernisation programme, which it regards as central to the company’s long-term competitiveness, efficiency and sustainability objectives”.
The latest offer also allows current shareholders to remain invested under Castlelake’s ownership should the deal proceed, rather than being forced to divest when it delists.
The airline’s largest single shareholder, its founder, Stelios Haji-Ioannou, who still owns about 15% of the company along with his family, has yet to comment publicly on the bid.
City analysts said the deal would raise more concerns about London-listed UK firms being picked off by foreign buyers.
The brokerage firm XTB’s research director, Kathleen Brooks, said “an iconic British aviation name” would be put in US hands. “This deal is symbolic, as it suggests a lack of stock market growth, and persistent underperformance of UK equities means that there is a massive for sale sign above UK corporates,” she said.
The chief investment commentator at the financial services firm Charles Stanley, Garry White, said: “The number and size of takeover bids from overseas buyers suggest that many UK-listed companies remain significantly undervalued. It is clear UK companies are currently being sold off on the cheap.”
after newsletter promotion
Andrew Lobbenberg of Barclays, however, said the bid price was “offering good value to shareholders” as well as an opportunity for Castlelake, with markets tending to undervalue firms ahead of large capital investment.
“We do not expect a radical change in the business plan of easyJet. We expect that Castlelake will continue to develop the holidays business and grow the airline modestly,” he said.
EasyJet, which has its headquarters at London Luton airport but is predominantly based at Gatwick, employs 19,000 people and flies about 93 million passengers a year. Its shares had fallen by about 30% in the past year before Castlelake’s bid interest emerged.
Read the full story at BBC ↗ · The Guardian ↗
EasyJet's board agreed in principle to a £5.5bn takeover by Castlelake at £6.90 per share This was the fifth takeover approach, following four rejected bids as low as £5.60 per share EasyJet shares rose nearly 10% following the announcement Castlelake must table a formal bid by 3 August under City takeover rules Castlelake stated it would support easyJet's fleet modernisation programme and current strategy Current shareholders may remain invested under Castlelake's ownership rather than being forced to divest EasyJet founder Stelios Haji-Ioannou, who owns 15% of the company, has not publicly commented on the bid The deal is symbolic of UK firms being picked off by foreign buyers due to persistent underperformance of UK equities Many UK-listed companies are significantly undervalued, suggesting they are being sold on the cheap The bid price offers good value to shareholders and represents an opportunity for Castlelake to invest in a market-undervalued firm
Read the full story at BBC ↗ · The Guardian ↗
- EasyJet's board has agreed in principle to a £5.5bn takeover by US private equity firm Castlelake at £6.90 per share, after rejecting four previous offers
- EasyJet shares rose nearly 10% on the announcement; Castlelake must table a formal bid by 3 August
- Analysts debate the valuation: some say UK firms are being undervalued and sold cheaply to foreign buyers, while others argue the price offers fair value to shareholders