London, United Kingdom. Budget airline easyJet has caught the eye of U.S. investment firm Castlelake for a possible takeover. easyJet has described the timing as “highly opportunistic,” while analysts point to its low valuation and other assets as reasons it may appeal to buyers.
Valuation and market performance
Analysts said easyJet’s low valuation, slots at key airports and stable fleet make it a takeover target, as the company has struggled to lift its market capitalisation since the COVID-19 pandemic.
“Few people can resist a bargain,” said Chris Beauchamp, chief market analyst at trading platform IG.
The British carrier’s shares have underperformed peers such as Ryanair, making it attractive to potential suitors. Deutsche Bank analyst Jaime Rowbotham said in a note that easyJet has “looked cheap” for some time.
Potential attractions for buyers
Rowbotham said possible attractions could include the airline’s fleet, room to improve margins and efficiency, and the airport slots it holds.
“This latest bid speculation will likely see a boost again to the easyJet share price,” he said.
A successful holiday business and an efficient Airbus fleet have supported results, despite the airline’s difficulty in growing passenger numbers from its position between low-cost and traditional rivals such as British Airways operator IAG.
Financial position and takeover estimate
EasyJet also has no direct exposure to the Middle East, where flights have been disrupted by the three-month-old Iran war.
Bank of America analysts said Castlelake’s strategic plan was unclear, but the airline’s fleet could be of interest. They estimated a takeover price at £6.50 per easyJet share.
Monday’s high of £4.50 per share valued easyJet at about £3.4 billion. The stock is still down about 15% for the year.
