ByREUTERS

JULY 6, 2026 16:54

EasyJet shares climbed to four-year peaks on Monday after the UK budget carrier agreed in principle to a £5.5 billion ($7.34 billion) takeover by US investor Castlelake, even as regulatory worries kept gains in check.

EasyJet announced on Sunday it would consider Castlelake's improved £6.90-per-share proposal, well above the initial £5.60 offer, raising hopes that lengthy talks could finally result in the London-listed airline going private.

Yet investor doubts kept the shares at £6.14, a 10% rise that still fell short of the bid level. The stock has risen over 50% since Castlelake's interest surfaced in late May.

"Nothing is certain, but I would think there is a high possibility that it will go ahead," said aviation analyst James Halstead. The offer appeared a "fair price" if easyJet meets its medium-term profit goals, he added.

The transaction highlights how multiple crises across Europe, from Russia's invasion of Ukraine and the Covid-19 pandemic to this year's Iran conflict, have hit carriers hard and drawn some into takeover sights.

At first, easyJet had dismissed Castlelake's moves as "highly opportunistic" given the wider global backdrop.

Carriers worldwide have grappled with surging jet fuel costs and losses linked to the conflict. Analysts predict further consolidation and failures amid ongoing geopolitical risks.

Deal must tackle 'complex' EU ownership rules

The bid revealed by easyJet on Sunday marked Castlelake's fifth approach and carried a nearly 24% premium to Friday's close. It nears the £7 level some investors reportedly sought after four earlier bids were turned down.

Airline analyst John Strickland noted the share price reflected pressures facing all carriers from "higher fuel prices and uncertainty in the context of the Iran war."

He saw no antitrust problems but flagged EU ownership rules requiring airlines active in the bloc to be majority-owned and controlled by EU nationals.

"The EU ownership and control elements are complex, and it is not yet fully clear how this will be addressed," he said.

One unnamed shareholder observed that current prices suggested the market saw more than a 30% chance the deal could collapse.

JPMorgan analysts also flagged questions over how Castlelake and easyJet would satisfy EU ownership rules and finalize a structure, while founder and major shareholder Stelios Haji-Ioannou's stance remains unclear.

EasyJet stated on Sunday that Castlelake had pledged "best endeavors" to secure regulatory approvals. Haji-Ioannou offered no comment on Monday.

Castlelake has said it would hold 49% of the bidding vehicle, with the rest owned by two EU nationals: former easyJet chief operating officer Peter Bellew and senior industry executive Mark Breen.

Castlelake to guide easyJet toward steadier conditions?

JPMorgan added that shareholder approval is not assured, leaving room for a rival bid or other carriers seeking parts of easyJet.

"While a decent premium to the lackluster trading of recent years, it still represents a deep discount to the share price of the late 2010s," said Chris Beauchamp, chief market analyst at trading platform IG.

"A sign of how in need easyJet is for someone to take the controls and plot a more successful flight path."

Castlelake must table a formal offer by August 3 or withdraw under UK takeover rules.

The potential take-private transaction also features a partial equity alternative.