EasyJet Shares Jump After Castlelake Signals Possible Bid

EasyJet shares jumped on Monday, June 1, after the British budget airline said it would consider any takeover proposal from U.S. investment firm Castlelake, while calling the interest “highly opportunistic.” The company said its share price has been weighed down by the Iran conflict as well as regulatory and other challenges. Castlelake said it was in the early stages of considering a possible offer.

In early trading, EasyJet shares rose as much as 12.5% to 447.8 pence, valuing the airline at £3.39 billion ($4.57 billion). The gain followed a decline of more than 22% year-to-date as of Friday.

EasyJet said it had not received an approach from Castlelake and there was no certainty an offer would be made. Under U.K. takeover rules, Castlelake has until June 26 to make a firm offer or walk away.

The airline said it would assess any potential offer if one was made. It added that its board remained confident in the company’s strategy and its ability to deliver long-term value for shareholders, despite recent pressures on the business.

Regulatory constraints could complicate a full takeover

Analysts said Castlelake has the financial capacity to make a bid, but they also flagged potential obstacles to a full takeover because of European and British regulatory restrictions. Those rules can affect airline ownership and control structures, which can limit who can buy and run a carrier.

Castlelake said separately on Monday that it held a 2.14% stake in EasyJet, making it one of the airline’s top 10 shareholders, according to LSEG data.

Fuel costs and bookings add to uncertainty

EasyJet warned in May that its full-year forecast remained uncertain. It cited higher fuel costs linked to the Iran conflict and said summer bookings were running behind last year.

Investors will watch for any formal Castlelake offer by the June 26 deadline and for updates from EasyJet on bookings, costs and its outlook for the rest of the year.