EasyJet has rejected a higher £4.93 billion approach from Castlelake but has extended the offer deadline to allow its US suitor more time to come up with a “more attractive proposal”.
The low-cost carrier said Castlelake had submitted a fourth approach on Tuesday worth £6.50 a share.
EasyJet said: “Having carefully reviewed it with its advisers, the board of easyJet continues to regard the fourth proposal as substantially undervaluing the company and its prospects and continuing to give rise to significant questions of deliverability.
“Accordingly, the board of easyJet has unanimously rejected the fourth proposal.
“However, the board believes that giving Castlelake access to limited commercial information, as Castlelake sought in the letter which contained the fourth proposal, might produce a more attractive proposal that better reflects the value of easyJet and its prospects and the interests of shareholders thereto.”
Castlelake – led by executive chairman and founder Rory O’Neill – now has until 5pm on July 5 to make a firm offer or walk away under UK takeover rules, extended by nine days.
The latest approach from the US investment firm follows easyJet’s rejection of previous proposals worth £6.25 a share, £5.60 a share and £6 a share.
open image in galleryLuton-based easyJet said the takeover interest comes at a time when its share price has been pushed lower by worries over the impact of the Iran war on the airline sector.
The FTSE 250 firm’s shares were down around 30% in the past year, before news of the bid interest.
The airline has pointed to its strong financial position and confirmed it remains focused on its medium-term target to deliver more than £1 billion in pre-tax profits.
EasyJet said it also “continues to be concerned about the ownership structure and deliverability of any offer from Castlelake”.
Castlelake, which has assets under management worth 36 billion US dollars (£27.3 billion), would have to make “satisfactory assurances and commitments” on these issues, easyJet added.
Under the deal, easyJet would be 49% owned by Castlelake, and co-investors including Brookfield Asset Management, and 51% owned by EU national individual investors, including Peter Bellew and Mark Breen.
Castlelake has previously insisted Mr Bellew and Mr Breen are “experienced executives who have successfully held senior positions in airlines, including European low-cost carriers”.
It said its possible offer “substantially de-risks the execution of the company’s business plan” and insisted it would offer current investors a “partial equity alternative to allow easyJet shareholders to remain invested in easyJet as a privately held business”.