Shares in EasyJet PLC (LSE:EZJ) flew less than 4% higher to 523.4p after its board rejected a third takeover approach from investment firm Castlelake, prompting the bidder to take its proposed 625p-a-share offer directly to shareholders.
The board of easyJet said it had unanimously rejected the proposal because it was "highly opportunistic" and failed to reflect the airline's medium-term prospects, strong balance sheet and growth opportunities.
The company also questioned the deliverability of Castlelake's proposed ownership structure and said it had reservations about the level of leverage and conditions attached to the bid.
It was noted by easyJet that its pre-tax profit had increased 46% in the two years to September 2025 and in the medium-term, there is a target to generate more than £1 billion of further profit.
The airline said ongoing fleet renewal, growth at easyJet Holidays and technology-driven efficiency gains would support future earnings growth, adding that the proposal amounted to an attempt to acquire the business "on the cheap".
Castlelake said its latest non-binding proposal was rejected on Sunday, with the airline's board having already turned down earlier approaches at 560p and 600p per share.
The latest proposal represents a 59% premium to the airline's closing share price on 28 May, the last trading day before the bid interest became public.
The US private equity firm pointed out that the proposed price stood above any easyJet closing share price since February 2022 and exceeded all analyst price targets published since the airline's interim trading update in April.
Easyjet shares have not traded over 600p since early 2022, though topped 590p last summer.
Accusing the board of an "unwillingness to engage", Castlelake said it had decided to disclose its latest approach publicly to allow shareholders to consider the offer and communicate their views to the board.
The bidder said it intends to offer shareholders a partial equity alternative, allowing some investors to retain an interest in easyJet as a privately held business alongside Castlelake.
Castlelake said it had developed a structure designed to comply with European airline ownership rules through partnerships with aviation executives Peter Bellew and Mark Breen, whose EU-controlled vehicle would hold a controlling stake in the acquisition structure.
Bellew is a former easyJet executive who later ran Malaysia Airlines and served as Ryanair's chief operating officer, while Breen has been involved in aviation investment and advisory roles.
Under UK takeover rules, Castlelake has until 5pm on 26 June to announce a firm intention to make an offer or walk away. It said there can be no certainty that a formal bid will ultimately be made.
Analysts have previously said the muted reaction in the share price, around £1 below the offer price, suggests investors still believe the would-be buyer will struggle to get around EU airline ownership rules or persuade easyJet’s founder, Sir Stelios Haji-Ioannou, to sell his 15.3% stake.
Comparing the bid to just before the Iran war kicked off "gives a better idea of whether Castlelake’s bid is generous or not", said Dan Coatsworth at AJ Bell, noting that this would be a 35% bid premium, which is less than the 43% average seen on UK-listed takeovers this year, according to his research.
"Reports suggest holiday demand has soared in recent weeks on the prospect of the Middle East conflict coming to an end.
"EasyJet shareholders may feel the company can quickly bounce back from the recent turbulence, and there is no need to sell out to Castlelake.
"After all, EasyJet was in a good place earlier this year and strategically it continues to make solid progress, including a fast-growing packaged holidays operation."
Although Castlelake said it had a solution to the EU ownership rules in the form of two Bellew and Breen becoming co-investors, "the market doesn’t believe Castlelake will succeed" based on the share price being well below the latest bid, Coatsworth said.
As well as the Haji-Ioannou family, the shares are held by a host of asset managers, "all of whom are likely to have their eye on the long-term prize. Castlelake may have to dig a lot deeper to win them over."
** UPDATE: Adds share price, response from company and analyst comments **
