EasyJet says takeover tilt from US firm would be ‘highly opportunistic’

Susannah Streeter, chief investment strategist at Wealth Club, said: “EasyJet is at the centre of a storm of speculation over a takeover, with the rumours lifting shares sharply in anticipation of a potential deal. The airline has been hit by a severe bout of turbulence sparked by the war in Iran and now private equity firm Castlelake appears ready to pounce. The airline has been battling headwinds from escalating tensions in the Middle East, which have rattled consumer confidence, driven up fuel costs and cast a shadow over the outlook for European travel demand.

“As a result, its valuation had dropped to a level not seen for more than three years, leaving the company looking vulnerable despite its strong liquidity position. Castlelake clearly believes the market may be underestimating easyJet’s longer-term earnings potential and the resilience of its network. EasyJet appears open to discussions but does not seem in the mood to accept a bargain-basement offer, calling the bid ‘highly opportunistic’.

“Castlelake is well known for investing in aircraft leasing and aviation finance. It already owns a small stake in easyJet and, under UK takeover rules, would need to offer at least 403.23p a share if it proceeds with a formal bid.

“The move is still at a very early stage and, while there is no certainty an offer will materialise, it clearly fits well within its portfolio. This is fresh evidence that the British markets are increasingly becoming a hunting ground for sophisticated institutional investors, with UK-listed stocks continuing to trade at lower valuations than other markets.”