EasyJet agrees £5.5bn take-private by Castlelake

What's the deal? EasyJetDealroom has a profile for this one. Try Dealroom → has agreed in principle to a £5.5bn takeover by US investment firm CastlelakeDealroom has a profile for this one. Try Dealroom →. The all-cash offer values the Luton-based low-cost carrier at 690p per share, and news of the agreement sent EasyJet shares up 10%.

Why now? The agreement, reached on Sunday, follows four previous bids that EasyJet rejected. When turning down earlier offers, the airline had accused Castlelake of trying to buy it "on the cheap." Castlelake currently owns about 2.14% of the carrier through funds it manages.

EasyJet is one of Europe's largest airlines, employing more than 19,000 people and flying around 1,200 routes across 35 European countries.

What could go wrong? The deal is not confirmed and still needs regulatory clearance. A key hurdle is that European Union rules require EasyJet to be majority-owned by EU citizens.

To satisfy that rule, Castlelake has proposed partnering with two EU nationals, businessmen Peter Bellew and Mark Breen, who would own an EU-based company holding majority control of the airline. Bellew is a former chief operating officer of both EasyJet and RyanairDealroom has a profile for this one. Try Dealroom →, while Breen runs an aerospace consultancy.

The signal: A full buyout of a listed tier-one low-cost carrier is rare in the current market, where peers such as IAGDealroom has a profile for this one. Try Dealroom →, RyanairDealroom has a profile for this one. Try Dealroom →, and Wizz AirDealroom has a profile for this one. Try Dealroom → have focused on capacity growth and balance-sheet repair over major takeovers. As rising fuel, labour, and airport costs squeeze mid-market carriers, private ownership and long-term capital may prove more attractive than public markets for funding EasyJet's fleet and turnaround plans.

Read more: CNBC, The Guardian, BBC, Yahoo Finance

Image credit: Gareth James