easyJet plc (LSE:EZJ) shares gained more than 2% on Monday after the airline disclosed that its board had rejected a revised takeover proposal from U.S.-based investment firm Castlelake, L.P., arguing that the offer significantly undervalued the business and its future growth prospects.
The board described the latest proposal as “highly opportunistic” and stated that it “still fundamentally undervalues easyJet and its prospects.”
Three Proposals Rejected
According to Castlelake, three separate non-binding indicative proposals were submitted to easyJet during June.
The first proposal, valued at 560 pence per share, was submitted on 16 June and rejected the same day. A second proposal of 600 pence per share followed, which Castlelake said was intended to encourage engagement with the board. A third proposal, valuing the airline at 625 pence per share, was submitted on 20 June and subsequently rejected on 21 June.
easyJet confirmed that the earlier approaches, priced at £5.60 and £6.00 per share respectively, were both “unanimously rejected as not being in the best interests of shareholders.”
Castlelake Highlights Premium and Financing Plans
Castlelake said its latest proposal represented a premium of approximately 59% to easyJet’s closing share price of 394 pence on 28 May.
The firm added that the proposed transaction would be fully financed through a combination of equity and debt funding, with Goldman Sachs having indicated its ability to arrange the necessary debt facilities.
The proposal also included an alternative structure under which shareholders could elect to receive unlisted, non-transferable and non-voting shares in a holding vehicle. Castlelake said this entity would be owned 49% by Castlelake and 51% by EU nationals and potentially other investors.
Board Raises Concerns Over Valuation and Structure
easyJet’s board argued that Castlelake’s valuation analysis relied heavily on share price levels affected by recent Middle East tensions, short-term earnings expectations and analyst forecasts.
The company said these measures failed to reflect its medium-term growth potential, financial strength and capital structure.
Management highlighted what it described as an “investment grade balance sheet with a net cash position” and noted that pre-tax profit increased by 46% across the two financial years ending September 2025. The airline also reiterated its ambition to deliver more than £1 billion in profit before tax.
In addition to valuation concerns, the board cited “considerable reservations about the elevated leverage and overall conditionality” of the proposal and described the suggested ownership arrangement as “opaque.”
Takeover Deadline Approaches
Under the UK Takeover Code, Castlelake must either announce a firm intention to make an offer or confirm that it does not intend to proceed by 5 p.m. on 26 June.
Until then, investors will be closely watching for any further developments as speculation continues around the future ownership of the airline.
More about easyJet
easyJet plc is one of Europe’s largest low-cost airlines, operating an extensive network of short-haul routes across the continent. The company serves millions of passengers annually through a fleet focused on point-to-point travel and maintains a strong presence in key European leisure and business markets.
In addition to its airline operations, easyJet continues to expand ancillary revenue streams and holiday offerings through its easyJet Holidays division, which has become an increasingly important contributor to group profitability. Management remains focused on long-term earnings growth, operational efficiency and maintaining a strong balance sheet while navigating a competitive European aviation market.
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