US suitor Castlelake lands more time in bid battle for EasyJet
EasyJet has granted US asset manager Castlelake additional time to submit a counter-offer in the escalating takeover battle for the British low-cost carrier, pushing the deadline to 5pm on Friday from an earlier cut-off on Thursday.
The airline confirmed it continues to recommend shareholders accept Apollo Global Management's £5.7bn bid, valuing shares at £7.15 each. However, Castlelake now has until the end of the week to present an improved proposal that could trump its rival's offer.
The bidding war intensified after easyJet rejected four earlier approaches from Castlelake, describing them as 'highly opportunistic' attempts to acquire the airline 'on the cheap'. The board finally accepted Castlelake's fifth proposal in early July, a £5.5bn offer at £6.90 per share. Days later, Apollo submitted its higher £5.7bn bid, which easyJet's board endorsed as delivering a 'superior outcome' for shareholders.
Apollo's offer represents an 81% premium to the £3.94 share price on 28 May 2026, the last trading day before Castlelake's interest became public knowledge. The substantial premium reflects how sharply easyJet's valuation had fallen amid operational pressures.
Financial pressures drive acquisition interest
The airline has faced mounting financial difficulties this year. Profits plunged 70% to £85m in the three months to June as the Iran conflict drove fuel prices sharply higher and customer demand weakened. For the six months ending in March, easyJet reported a headline loss after tax of £377m, 27% deeper than the previous year, despite revenue growing 12% to £3.95bn.
A late surge in bookings during the most recent quarter failed to offset earlier declines in reservations following the outbreak of war in the Middle East. These financial pressures left the carrier vulnerable to takeover approaches, with its share price creating what bidders viewed as an attractive entry point.
Both suitors have been granted due diligence access to examine easyJet's operations in detail. 'Friday's outcome will reveal if appetite for easyJet has been affected by latest events in the Middle East,' said Russ Mould, investment director at AJ Bell.
EU ownership rules create regulatory hurdle
Any successful bid faces significant regulatory challenges. The European Union requires airlines operating within its territory to maintain at least 51% local ownership and control. EasyJet established its Austrian subsidiary, easyJet Europe, in 2017 following the UK's Brexit vote in June 2016, obtaining an Air Operator's Certificate from Austrian regulators to preserve its EU flight rights.
Castlelake has proposed addressing these requirements by partnering with Irish aviation executives Peter Bellew and Mark Breen, who would hold a controlling 51% stake through an EU-based company. Apollo has not yet disclosed its proposed ownership structure.
The regulatory landscape may become more complex. According to an EU official speaking in July, the European Union plans to review airline ownership rules this autumn to clarify corporate structures and prevent foreign investors from gaining effective control of EU carriers. The review aims to protect what officials describe as strategic autonomy in the aviation sector.
Founder's stake remains crucial
The outcome may ultimately depend on founder Stelios Haji-Ioannou and his family, who retain a 15.3% stake in the airline. The family's shareholding was diluted from 25.3% in September 2021 when they declined to participate in a £1.2bn rights issue, following a rejected takeover bid from rival Wizz Air. That dilution cost them the ability to block decisions requiring three-quarters shareholder support.
Stelios also retains ownership of the 'easyJet' brand itself through his private company easyGroup, from which he receives ongoing royalty payments based on the airline's revenue. This additional commercial relationship could influence his stance on any takeover proposal.
Apollo brings substantial experience in airline acquisitions to the contest. The private equity firm completed a $5.2bn acquisition of Atlas Air Worldwide Holdings in March 2023, taking the cargo carrier private from Nasdaq. Last year, its private credit arm also provided $745m in financing to Virgin Atlantic for its Heathrow airport slots, demonstrating continued appetite for aviation investments.
If Apollo prevails, it would add easyJet to a portfolio that already includes significant airline holdings. However, both bidders must first navigate the complex EU ownership requirements and secure backing from key shareholders, including the influential Haji-Ioannou family, before any deal can proceed.
