BUSINESS NEWS
EasyJet’s large fleet of 356 aircraft
appeals to US investment fund Castlelake, which has a particular focus on aircraft leasing
Who would ultimately pay for an easyJet takeover?
ANALYSIS: £5.5bn bid raises questions for airline group. Ian Taylor reports The airline’s board noted
US investment fund Castlelake’s bid for easyJet moved forward with the announcement this week of an agreement in principle on “the key financial terms” of an offer valuing easyJet at £5.5 billion. This ‘fifth proposal’ was
significantly up on Castlelake’s offer of £4.9 billion last week and its initial bid of £4.2 billion. EasyJet’s statement that the latest
terms “are at a value” the board could recommend to shareholders suggests a takeover is on. A deadline of August 3 has been set for Castlelake to confirm its “firm intention” to make an offer or withdraw. This much is clear. Much else is not, including Castlelake’s intentions.
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Castlelake “emphasised its tremendous respect” for easyJet and “support” for future growth and fleet modernisation. This is the kind of talk we might expect from an enthusiastic suitor, but is a clue to its interest and to a concern for easyJet’s leadership. Castlelake has interests in
aviation, with a significant minority stake in Scandinavian carrier SAS, but its prime interest in the sector is in aircraft leasing – its assets include about 400 aircraft – which offers annual investment returns way above what airlines make. EasyJet operates 356 aircraft, with almost 300 more on order
and purchase rights on another 100 at a time when securing aircraft deliveries is challenging. However, most of Castlelake’s
$36 billion worth of assets lie in finance and real estate. A recent deal, in April, involved an $8 billion purchase of a mortgage loan company. The fund is majority owned by an
even bigger fund, Brookfield Asset Management, whose $1 trillion in assets span energy, infrastructure, real estate and private equity. The attraction of easyJet is that it appears cheap. Its assets alone, if
Continued on page 46
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