EasyJet shares jump after £5.5 billion Castlelake bid agreed in principle

EasyJet shares rose more than 10% in early London trading on Monday after the UK low-cost airline agreed in principle to a £5.5 billion, or $7.3 billion, takeover proposal from Castlelake, CNBC reported. The move signals renewed deal activity around the carrier after it rejected a lower approach from the US private equity manager last month.

CNBC reported that EasyJet was up 10.5% shortly after 8:15 a.m. in London, equivalent to 3:15 a.m. Eastern time. Market data cited by CNBC showed the shares at 615.80 pence at 8:22 a.m. London time, up 57.60 pence, or 10.32%.

The proposed transaction would take EasyJet private if completed, according to CNBC. Castlelake’s revised proposal was agreed on Sunday, following an earlier £4.93 billion approach that EasyJet turned down last month.

The new proposal is structured as a cash offer of $6.90 per share, CNBC reported. In a cash takeover, the buyer offers shareholders a fixed cash amount for each share they own, rather than stock in the acquiring entity. For public-market investors, the share price often moves toward the proposed offer level as traders assess the probability that a binding deal will follow.

Castlelake has until Aug. 3 to make a firm offer or withdraw, according to CNBC. That deadline means the current agreement in principle does not by itself complete the transaction. It gives the bidder a defined period to move from a preliminary position to a formal proposal, or to walk away.

The potential acquisition comes during a difficult period for global airlines. CNBC reported that the sector is under pressure from a jet fuel squeeze linked to conflict in the Middle East. Fuel is one of the largest variable costs for airlines, and changes in supply conditions can affect margins, fares and capacity decisions across the industry.

EasyJet is one of Europe’s major budget carriers, with investors closely watching how low-cost airlines handle fuel costs, demand and balance sheet pressures. The Castlelake approach places a valuation marker on the company at a time when the airline sector faces external cost pressure and uneven investor sentiment toward transport stocks.

Neither a completed transaction nor final terms beyond the reported proposal have been confirmed in the information reported by CNBC. The next formal step is Castlelake’s decision by the Aug. 3 deadline on whether to make a binding offer.

This story draws on original reporting from CNBC.