Activist Investor Castlelake Builds 14% Stake in easyJet, Explores Takeover

Castlelake disclosed late on Friday that it was in the early stages of considering an offer for easyJet. U.S. investment firm had not yet approached easyJet’s board at the time of the disclosure.

Castlelake holds a 14 percent stake in the airline through shares held on behalf of funds it manages. 6 billion at 23p a share. easyJet shares closed on Friday at 398p each.

Castlelake has assets under management worth 36 billion US dollars (£27 billion). Rory O’Neill is executive chairman and founder of Castlelake. The firm entered talks in January with bankrupt US carrier Spirit Airlines over a possible takeover.

Castlelake previously bailed out collapsed Scandinavian Airlines and then sold on its shares to Air France-KLM. easyJet branded the possible approach as highly opportunistic. The airline confirmed it has not held talks with Castlelake.

It said the 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 Luton-based carrier highlighted its strong financial position. It said it remained focused on its medium-term target to deliver more than £1 billion in pre-tax profits.

EasyJet also noted the considerable regulatory, financial and other execution challenges associated with a potential takeover. The company said it has a duty to maximise shareholder value and would consider any proposal should one be made. Castlelake has until 5pm on June 26 to make a firm offer or walk away under UK takeover rules.

Shares in easyJet surged by up to 12 percent in opening trade on Monday. The stock was down by more than 30 percent in the past year before news of the potential bid. In interim results last month, easyJet reported a half-year pre-tax loss of £552 million.