Shares of EasyJet Plc surged 9.4% to 435.2 pence after the budget carrier confirmed its board would consider any formal takeover approach from U.S. alternative investment firm Castlelake.
Castlelake, which owns a 2.14% stake in EasyJet, disclosed on Friday that it was weighing a possible offer but had not yet made contact with the airline’s board. Under U.K. takeover rules, the firm has until June 26 to either lodge a firm bid or walk away from a potential approach.
Any bid from Castlelake would be required by those rules to value EasyJet at at least 3.06 billion, equivalent to no less than 403.23 pence per share. The stock’s jump pushed the price comfortably above that floor and toward the upper end of its recent trading range.
In a statement, EasyJet said the board would evaluate any offer if one were formally put forward. The carrier also noted its share price had been temporarily depressed by the conflict in the Middle East in addition to regulatory and other pressures. The company added that "The Board remains highly confident in easyJet 27s strategy and its ability to deliver attractive long-term value for shareholders," while describing Castlelake 27s timing as "highly opportunistic."
On the analyst front, EasyJet acknowledged awareness of Castlelake 27s announcement on June 1, reiterating its comment that the possible bid was "highly opportunistic." Broker views diverged: RBC maintained an Outperform rating on the stock, while JPMorgan kept an Underweight stance with a 340 pence price target. Those differing recommendations reflected contrasting judgments on whether a proposed offer would be made and whether it would create sufficient shareholder value.
The London Stock Exchange session left EasyJet as the top gainer of the day, standing out in a wider European market that was under pressure. The pan-European Stoxx 600 slipped as rising Middle East tensions pushed oil prices higher - a headwind that has generally weighed on airline stocks in recent months.
Market participants said the combination of a plausible U.S. acquirer already holding a stake, the legally binding minimum bid level under the U.K. Takeover Code, and EasyJet 27s board signalling it would consider a formal proposal, served as a strong catalyst for the share move.
EasyJet, Europe's second-largest low-cost airline, could be taken private if Castlelake proceeds with a bid, a prospect investors evidently rushed to price into the stock. That buying interest lifted the share price beyond the threshold set by takeover rules and toward the high end of recent trading levels.
This report presents the developments as disclosed by the parties involved and reflects market reactions during the trading session. It does not reach conclusions on the ultimate likelihood of a transaction beyond the information provided by EasyJet and Castlelake.