The British low-cost airline EasyJet confirmed on Monday that it was open to discussing a potential bid by the U.S. investment firm Castlelake to acquire the airline and take it private in a multi-billion pound deal that would see the family of founder Stelios Haji-Ioannou lose control of the carrier.
News first emerged that Castlelake was interested in acquiring EasyJet on May 29, although at that time, the ‘alternative investment firm’ which specialises in acquiring assets, hadn’t yet even approached EasyJet about the offer.
Days later, EasyJet has responded to the news, with its board of directors saying in a statement that it has a duty to “maximise shareholder value and will consider any proposal.”
That being said, EasyJet has already highlighted two massive obstacles that Castlelake will have to overcome should it make a formal proposal to acquire EasyJet, with the airline describing Castlelake’s interest as “opportunistic.”
“The Board notes the highly opportunistic timing when easyJet’s share price is temporarily depressed due to the current situation in the Middle East and its impact on customer confidence and jet fuel prices,” the airline said in a statement.
The statement added that “considerable regulatory, financial and other execution challenges associated with a potential takeover of easyJet” could affect its decision to accept any offer from Castlelake.
Castlelake’s interest in EasyJet is in its assets, such as multi-million-dollar Airbus A320 airplanes and jet engines. Given the effect that rising jet fuel prices have had on EasyJet’s share price, the airline’s assets are currently worth more than the total valuation of the company.
The investment firm has previous dealings in the aviation industry and had acquired a 32% stake in SAS Scandinavian Airlines before selling its shares to the Air France-KLM Group.
Last year, Castlelake debuted a specialist aviation lending business which provides “debt capital to airlines and leasing companies for new and used aviation assets.”
The lending business was used to provide Virgin Atlantic with a $400 million loan secured against the carrier’s assets, including an Airbus A350-1000 and nine Rolls-Royce Trent jet engines.
More recently, Castlelake was reportedly in early-stage talks with Spirit Airlines about a possible asset sale. The talks did not, however, amount to anything.
Castlelake currently holds shares in EasyJet worth around 2.14% of the company. If the firm were to make an offer for EasyJet, it would have to offer at least 403.23 pence per share.
Following the news of Castlelake’s interest in EasyJet, the share price shot up from 398 pence per share to 444.30 as of Monday morning.
