Shares in easyJet PLC (LSE:EZJ) jumped almost 10% after its board said it "would be minded to recommend" an improved takeover offer from US investment firm Castlelake if a firm bid is made, as the parties agreed an extension to takeover talks.
Castlelake submitted a fifth proposal on Saturday to buy the shares it does not already own for 690p cash, alongside a partial unlisted share alternative.
The board said it had reviewed the proposal with its advisers and concluded that the financial terms were at a value it could support, subject to agreement on the remaining terms and conditions of any offer.
In early trading on Monday, easyJet's shares increased 9.8% to 617p.
Castlelake's latest proposal represents an increase from its fourth approach, at 650p, was rejected by easyJet's board just over a week ago, when directors said the bid substantially undervalued the airline and raised concerns about its structure and deliverability.
The latest approach remains conditional on satisfactory due diligence, definitive transaction documents and regulatory approvals.
Under UK takeover rules, the private equity investor's put-up-or-shut-up deadline has been extended to 5pm on 3 August.
Castlelake said it would use "best endeavours" to obtain the regulatory clearances needed to complete a transaction and indicated its support for easyJet's fleet modernisation programme and long-term growth plans.
** UPDATE: Adds share price **
