July 5 (Reuters) – British budget airline easyJet has agreed to a sweetened takeover bid from U.S. investment firm Castlelake that values the carrier at up to £5.5 billion ($7.34 billion), it said on Sunday, a major potential shakeup for Europe’s aviation sector.
The new offer at £6.90 a share represents a 73% premium to easyJet’s closing price on May 29, when the private equity fund manager first disclosed its interest in the airline to British regulators, driving the shares up steeply since.
EasyJet, which flies low-cost routes in 38 European countries, has been grappling with operating challenges as the Iran conflict has pushed jet fuel prices sharply higher and squeezed margins for carriers globally.
Locked in fierce competition with rival Ryanair, the airline had long been viewed as a takeover target with its valuable landing slots at airports including London Gatwick, Paris and Geneva attractive to potential bidders.
EasyJet in June rejected a £4.93 billion proposal from Castlelake but signalled an interest in continuing talks by granting the private equity manager limited access to the airline’s commercial data.
Analysts had raised questions about whether Castlelake could meet European Union regulations requiring airlines operating in the bloc to be majority owned and controlled by EU nationals.
While this was not mentioned in Sunday’s offer, Castlelake previously said it would own 49% of the bidding vehicle with the remainder held by two EU nationals, former Malaysia Airlines CEO Peter Bellew and senior industry executive Mark Breen.
EasyJet operates 355 aircraft across more than 1,200 routes and struggled to recover since the COVID-19 pandemic. But its package holidays business and efficient Airbus fleet have been bright spots.
The British market is on course to set a mergers and acquisitions record in 2026 as weaker valuations among London-listed companies attract buyers. EasyJet initially said Castlelake’s approach was “highly opportunistic” as the Iran war turmoil depressed its shares.
($1 = 0.7490 pounds)
(Reporting by Yamini Kalia, Ruchika Khanna, Angela Christy in Bengaluru; Editing by Rashmi Aich, Louise Heavens and Cynthia Osterman)
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