easyJet agrees in principle to $10.4B Cdn takeover by U.S. investment firm

easyJet is set to be taken private after reaching an agreement in principle to accept a £5.5 billion (roughly C$10.4 billion) takeover offer from U.S.-based investment firm Castlelake, Reuters reports. 

The companies announced the preliminary agreement on Sunday (July 5), saying they have requested more time to finalize the transaction after weeks of negotiations that included several rejected bids.

Under the proposed deal, Castlelake would acquire the airline for £6.90 (C$13.13) per share.

If completed, the transaction would deliver a windfall of nearly £800 million (C$1.5 billion) to easyJet founder Stelios Haji-Ioannou and his family, who continue to hold more than 15 per cent of the airline.

The latest offer represents an improvement over Castlelake's previous bids.

EasyJet rejected a £6.50 (C$12.37)-per-share proposal just 10 days ago, arguing it significantly undervalued the business.

The proposed acquisition follows a challenging year for the British low-cost carrier.

EasyJet issued two profit warnings this spring as soaring fuel prices and weaker demand weighed on performance.

The airline attributed softer bookings in part to geopolitical tensions, including the conflict involving the U.S., Israel and Iran.

The carrier also continues to face intense competition from rival low-cost airlines including Ryanair, Wizz Air and Jet2.

Minneapolis-based Castlelake specializes in aviation finance and aircraft leasing, making easyJet a strategic fit for its portfolio.

Industry analysts have suggested the investment firm could leverage the airline's fleet within its leasing business and potentially separate easyJet Holidays into a standalone operation.

Castlelake has previously invested in Scandinavian carrier SAS through a debt restructuring and is currently divesting that stake to Air France-KLM.

Headquartered at London Luton Airport, easyJet operates from 164 airports across 38 countries and employs approximately 19,000 people.

JPMorgan analysts are questioning how Castlelake and easyJet would navigate European Union ownership rules and settle on a deal structure, noting that the position of founder Stelios Haji-Ioannou also remained uncertain. 

EasyJet said Sunday that Castlelake had committed to using its "best endeavors" to secure the necessary regulatory approvals. 

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