Shares in EasyJet (LON:EZJ) jumped over 10% on news US private equity firm Castlelake was considering making an offer. Castlelake is majority owned by US alternative asset management firm Brookfield (NYSE:BAM).
‘Highly opportunistic’ timing
Castlelake issued a statement late on Friday 29 May saying it was ‘in the early stages of considering a possible offer’ for the firm. Today it revealed it owns 16.2 million shares or 2.1% of EasyJet’s share capital.
The US firm also said any bid would be at no less than 403.23p per share. EasyJet shares closed at 398p on Friday so investors will have to hope any bid, if one comes, is at a healthy premium.
EasyJet responded by saying it had not had any discussions with Castlelake, nor had it received an official approach. It also called the timing ‘highly opportunistic’ given the depressed share price but it would consider any proposal.
Given Castlelake already owns 2% of the company, it will have been watching the EasyJet share price for some time. The airline calls the timing highly opportunistic, but Castlelake can’t be blamed for the company’s long-term performance.
Frankly, the stock has been a total dud since 2015 when the shares were trading close to £20. Granted there’s been a small bounce recently, but they’re still below their pre-Iran conflict level.
Before they get carried away, investors need to note there is a big hurdle for Castlelake in terms of regulation. EU rules mean non-EU buyers are barred from owning majority stakes in European airlines.
Therefore, Castlelake would have to team up with a European partner if it were to make an offer. In that light, we wonder if Friday’s announcement wasn’t just an attempt to boost the share price for its own gain.
Read the press release here:
https://corporate.easyjet.com/home/default.aspx
