easyJet Castlelake Takeover Offer Reaches £6.90 a Share After Four Rejections

The easyJet Castlelake takeover offer has escalated to £6.90 per share after the airline’s board agreed in principle to a deal valuing the carrier at approximately £5.2 billion, representing a 73% premium to easyJet’s closing price on 29 May, the trading day before bid interest became public.

easyJet Castlelake Takeover Offer: From 625p to £6.90

The path to that figure was not straightforward. US investment firm Castlelake made four previous proposals before easyJet’s board moved toward acceptance. An earlier 625p-per-share approach, which Castlelake took directly to shareholders after a third board rejection, carried a 59% premium to easyJet’s closing price on 28 May. The board at that stage questioned the deliverability of Castlelake’s proposed ownership structure and raised reservations about the level of leverage and conditions attached.

The UK Takeover Code required Castlelake, by no later than 5.00 p.m. on 26 June 2026, to either announce a firm intention to make an offer under Rule 2.7 or walk away. As the deadline neared, easyJet shares had fallen nearly 7% over the preceding week as investors priced in the possibility of no deal. The offer update that eventually followed was published as a regulatory notice on the London Stock Exchange (LSE) on 5 July 2026.

The gap between the initial 625p approach and the agreed £6.90 figure tells its own story about the negotiation. The board’s leverage, modest as it appeared during weeks of rejection, ultimately extracted a further 65p per share over the rejected public offer.

The Business Case Behind the Premium

Castlelake’s persistence makes more sense when set against easyJet’s underlying financials. The airline reported FY25 headline profit before tax of £665 million for the twelve months ended 30 September 2025, up 9% year-on-year. Headline EBIT came in at £703 million, 18% ahead of the prior year. Net cash at the period end stood at £602 million, and headline return on capital employed was 18.0%.

The holidays division is also pulling weight. easyJet holidays delivered £250 million in headline profit before tax in FY25 and has since upgraded its medium-term profit before tax target to £450 million by FY30, having exceeded its previous forecast ahead of schedule. The airline segment contributed the remaining £415 million of group headline profit before tax.

A proposed dividend of 13.2 pence per share for FY25, equivalent to 20% of FY25 headline profit after tax, underlines a capital-return discipline that a leveraged acquirer would need to factor into any post-acquisition model. That, combined with the board’s stated concerns about leverage levels in the earlier bid, suggests the final structure will be watched closely.

What the Bid Says About UK Equity Valuations

The easyJet Castlelake takeover offer is not an isolated data point. Across the London market, overseas and private-equity buyers have repeatedly identified a gap between where UK-listed companies trade and what a willing buyer will pay for control. easyJet’s board called the initial approach opportunistic, arguing Castlelake was seeking to exploit a share price weakened by Middle East conflict risks, jet fuel price volatility and softer demand for holiday air travel. That framing has merit. It also does not make the valuation gap any less real.

The tension here is familiar: a depressed market price creates the very opportunity that attracts the buyer, who then has to bid it away. The 73% premium Castlelake eventually agreed to pay is the arithmetic of that tension.

For investors holding EZJ, the in-principle agreement at £6.90 sets a floor of sorts, though the distance between in-principle and completed deal has tripped up more than a few situations in recent years. The financing structure, given the board’s earlier leverage concerns, is the variable most likely to determine whether this one closes. The next test is whether Castlelake can demonstrate a credible funding plan that satisfies both the board and the Takeover Code’s timetable.