EasyJet reaches 'agreement in principle' over potential takeover

Here is the latest breaking news from around the world: EasyJet reaches 'agreement in principle' over potential takeoverImage source, Getty ImagesByJemma Crew, Business reporter and Marc Ashdown, Business correspondentPublished14 minutes agoEasyJet has reached an agreement in principle with a US investment firm over a potential takeover offer worth around £5. The low-cost Luton-based airline had previously rejected four takeover offers from Castlelake, which owns a stake of about 2. 14% in EasyJet through the funds it manages.

It said those offers had been worth £6. 25 a share, and has previously accused Castlelake of trying to buy it "on the cheap". On Sunday EasyJet's board of directors and Castlelake said they had reached an agreement in principle on a proposal put forward on 4 July, worth £6.

The Details

This does not mean a deal has been confirmed. Castlelake now needs to get regulatory clearances and the approvals required for the transaction to go ahead. One significant regulatory hurdle is that EasyJet is a European company, so by EU rules it needs to be 51% owned by a European company.

Castlelake is a US firm, although it has previously outlined how it would endeavour to comply with this rule. It has until 17:00 on 3 August to either to announce a firm intention to make an offer or to say it does not intend to do so. If an offer is made it would need to be put to a shareholder vote.

EasyJet's board on Sunday said the financial terms of the proposed offer "are at a value that the Board would be minded to recommend to easyJet shareholders", should a firm offer be made. EasyJet is one of Europe's largest airlines. It employs more than 19,000 people, and flies around 1,200 routes across 35 European countries.

What Experts Say

It has previously said its share price had been "temporarily depressed" - partly due to the impact of the US-Israel war with Iran on the travel sector. EasyJet shares closed on Friday at £5. Before news of the first bid emerged in June, EasyJet's stock had fallen by more than 30% in the past year.

Castlelake has assets under management worth $36bn (£27. Announcing the agreement in principle, EasyJet said Castlelake had "emphasised 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". Related topicsEasyjetAir travelCompaniesLutonMore on this storyEasyJet rejects fourth takeover offerPublished25 JuneEasyJet says US bidder trying to buy it 'on the cheap' as it rejects £4.

The development has drawn wide international attention, with diplomatic circles watching closely.