EasyJet Plc stock traded well below Castlelake LP’s latest takeover bid, signaling investors remain concerned about the potential barriers facing the £5 billion-plus deal.
The budget carrier finally agreed in principle to the U.S. investment firm’s offer of £6.90 per share in cash after calling previous bids too low. The airline’s stock jumped Monday by as much as 11%, yet it languishes beneath even the third and fourth rejected offers by Castlelake.
EasyJet and Castlelake haven’t specified what will happen to the airline’s assets, management and employees if the deal goes through. If Castlelake decides it wants to sell assets such as planes and prime landing slots, there may be some pushback over possible anti-competitive issues and the idea of stripping down one of the U.K.’s pioneering carriers.
“There’s still some doubts over ownership structure and regulatory approval, particularly with this deal potentially getting political attention with EasyJet being a well-known U.K. company,” said Conroy Gaynor, a Bloomberg Intelligence analyst. “Even though we think hurdles can be worked out, a £6.90 price today, with some adjustment for time value of money, would imply about 100% probability of the deal happening, and we certainly are not there.”
