easyJet. Photo: Photo: William Barton / Shutterstock.com British low-cost airline easyJet has made a significant step toward a potential takeover over the weekend after its board reached an "agreement in principle" with investment firm Castlelake regarding the financial terms of a recommended acquisition.
According to the latest proposal, the airline would be valued at £6.90 per share, in cash, for all issued shares and for shares to be issued that Castlelake does not yet own. The offer would also include a partial unlisted share alternative. The final structure of that element is still under debate.
According to a joint announcement by both parties, easyJet's board considers that the financial terms have reached a level that would allow it to recommend to shareholders that Castlelake proceed with a formal offer under the UK Takeover Code.
However, the proposed acquisition is not yet guaranteed. Castlelake must still complete satisfactory due diligence, secure regulatory approvals and agree the final transaction documentation before a binding offer can be made.
As part of the negotiations, Castlelake has pledged to use its best efforts to obtain the regulatory clearances required to complete the transaction. The investment firm also expressed support for easyJet's long-term strategy, highlighting its fleet modernization program as a key factor in strengthening the airline's competitiveness, operational efficiency and sustainability.
"Castlelake has emphasized its tremendous respect for easyJet and its people, along with its intention to support its future growth and transformation to a stronger, more resilient European airline for the benefit of all stakeholders if the transaction proceeds to completion," says easyJet's update.
The announcement also confirmed that the UK's Panel on Takeovers and Mergers has approved an extension to the deadline by which Castlelake must either submit a firm offer or walk away.
The new "put up or shut up" deadline has been pushed to 5 p.m. on Monday, August 3, 2026. By that date, Castlelake must either announce a firm intention to make an offer or confirm that it does not intend to proceed. If it withdraws, it would be subject to restrictions under Rule 2.8 of the UK Takeover Code.
Castlelake has reserved the right to adjust the structure of the offer, including bringing changes to the mix of cash and the partial equity alternative.
Moreover, the investment company also emphasized that, provided easyJet pays any additional dividends or returns capital to shareholders prior to the completion of a deal, it reserves the right to cut the value of its offer by an equivalent amount.
Despite the progress made, both easyJet and Castlelake stressed that there is no certainty a formal takeover offer will ultimately be made. The airline's board said it will provide further updates when appropriate and advised shareholders to take no action at this stage.