British low-cost carrier EasyJet has reached an agreement in principle with US investment firm Castlelake over a potential takeover offer valued at approximately £5.2 billion.
The Luton-based airline accepted a proposal submitted on July 4 that values the company at £6.90 per share.
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Castlelake already manages funds holding a 2.14% stake in EasyJet.
EasyJet operates around 1,200 routes across 35 European countries and employs over 19,000 people. The airline previously resisted acquisition attempts from the investment firm.
During initial negotiations, EasyJet criticized Castlelake's valuation strategy, describing it as buying the airline "on the cheap," according to BBC News.
The board indicated a positive stance toward the offer, stating that the terms "are at a value that the Board would be minded to recommend to easyJet shareholders."
Regulatory Hurdles and Strategic Value
The acquisition remains subject to significant regulatory hurdles.
Under European Union regulations, European airlines must maintain at least 51% European ownership, presenting a structural challenge for the US-based firm.
Former aviation executive John Strickland highlighted EasyJet's strategic assets. "It has high brand recognition.
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Looking at the business itself, it has a substantial fleet of aircraft, numbering over 350 planes, a massive order book – aircraft slots on production lines are hard to get your hands on," he told the BBC's Today programme.
Strickland also noted the carrier's "very strong slot position at a number of large, congested airports around Europe, including Gatwick and Paris Charles de Gaulle."
He dismissed speculation that the investment firm would downsize operations.
EasyJet noted that its stock value experienced downward pressure due to geopolitical conflicts influencing the travel sector, describing the valuation as "temporarily depressed."
Castlelake, which manages $36 billion in assets, expressed its long-term objectives for the European carrier.
The airline stated that Castlelake "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."
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Castlelake has until 17:00 BST on August 3 to announce a firm intention to make an offer or formally withdraw from the transaction.
