EasyJet capitulates after months of rejection to $7.3 billion bid

American investment fund Castlelake pushed the British carrier into an agreement only on its fifth attempt. What changed the minds of easyJet's management and why is this not as straightforward a deal as it seems?

Rejected, rejected, rejected, rejected, and finally yes

The management of easyJet $ESYJY announced on Sunday that it is ready to accept a takeover bid from American investment fund Castlelake. The offer of 6.90 pounds per share values the British low-cost carrier at up to 5.5 billion pounds, roughly 7.3 billion dollars, as reported by Reuters.

The path to an agreement, however, was far from direct. Castlelake entered the fray at the end of May and has since gradually raised the price from an initial 560 pence to a final 690 pence per share. In the meantime, four offers were rejected by easyJet's management as inadequate – specifically, bids of 6.50, 5.60, 6, and 6.25 pounds per share, with the American fund being accused of trying to buy the carrier "for a song".

The final offer represents a 73% premium to the share price on May 29, when Castlelake first disclosed its interest in the carrier to British regulators.

Why the American fund was attracted to easyJet

Castlelake is neither a typical activist fund nor a competing airline – it is an investment group from Minneapolis that has long specialized in aircraft financing and leasing. According to its own figures, it has business relationships with around 200 aviation companies worldwide.

The interest in easyJet also makes sense given what the carrier owns. Key attractions are the valuable airport slots at London Gatwick, Paris, Geneva, and Milan – assets that are difficult to obtain in crowded European airspace except through acquisition. On top of that, there is the modern fleet of Airbus A320 aircraft $AIR.PA.

The carrier's management initially spoke of the "highly opportunistic" timing of the offer, as $ESYJY shares had fallen due to the impact of the Iranian conflict on jet fuel prices. Nevertheless, the company later granted the fund limited access to its business data, a first signal that it was actually interested in a deal.

The recent share price drop may reflect broker downgrades and profit-taking by investors who had been waiting for a deal.

Andrew Lobbenberg, Barclays analyst

One complication called European regulation

But the transaction has one catch that makes it more than just a standard buyout. The European Union requires that airlines operating within the bloc must be majority-owned and controlled by EU citizens – and the American fund does not meet this condition on its own.

Castlelake is therefore structuring the deal so that it would hold 49% in the ownership structure, while the remaining majority would be held by two EU citizens – former Malaysia Airlines CEO Peter Bellew (who previously had a short stint at easyJet) and industry veteran Mark Breen, whose involvement is meant to ensure compliance with European ownership rules.

In a joint statement on the agreement, the fund stressed that it wants to further develop the airline, not just extract value.

Castlelake expressed enormous respect for easyJet and its people and an intention to support fleet modernization and future growth.

From the joint statement of easyJet and Castlelake

A carrier struggling with fuel prices

Behind easyJet management's willingness to negotiate is also the harsh reality of recent months. The carrier reported a loss per share of 0.501 pounds for the first half of fiscal year 2026, which was 15.3% worse than analysts had expected. The decline is due to a combination of higher fuel costs linked to the Iranian conflict and weaker demand for summer holiday packages.

Meanwhile, the market has been uncertain about whether a deal would happen at all. A week before Sunday's announcement, easyJet shares fell nearly 7% after several brokerage houses cut their recommendations on expectations that the deal might not materialize. Even so, the shares remained about 40% higher than before Castlelake first disclosed its interest.

• Offer price: 6.90 pounds per share

• Valuation of the carrier: up to 5.5 billion pounds (7.3 billion dollars)

• Premium to the May 29 price: 73%

• Number of rejected offers before agreement: 4

What happens next

The agreement currently being discussed is only an "agreement in principle" – Castlelake must submit a formal and binding offer by August 3, otherwise under British takeover rules it must walk away from the transaction. Only then would due diligence and a shareholder vote follow.

If the deal is completed, it will be one of the largest departures from the London Stock Exchange in recent years. According to Reuters, Britain is heading for a record year in mergers and acquisitions, as weaker valuations of London-listed companies attract foreign buyers. EasyJet, which faced two profit warnings last year, could thus become one of the most prominent examples of this trend.

For Stelios Haji-Ioannou, the founder of the carrier, a completed transaction could, according to available estimates, mean a return close to 800 million pounds.