EasyJet agrees to a takeover price. The market has its doubts on the deal.

By Steve Goldstein

EasyJet has agreed on a takeover price with Castlelake, an American investment firm.

EasyJet shares on Monday traded at a discount to the price the U.K. airline says it's reached with an American investment firm on a buyout.

EasyJet shares (UK:EZJ) rose 10% to 614 pence, which is below the 690 pence that the airline's board and Castlelake agreed in principle upon, according to a statement released on Sunday.

It was the fifth takeover proposal from Castlelake, which now has the challenge of obtaining regulatory approval.

Media outlets including the Irish Examiner say the Castlelake offer will attempt to meet European Union takeover rules on local ownership by having two Irish aviation executives, Peter Bellew and Mark Breen, own 51% of the bidding vehicle. Bellew is a former chief operating officer of easyJet, as well as the former CEO of Malaysia Airlines.

Castlelake, according to the easyJet statement, will support the airline's fleet modernization plan. The companies have an Aug. 3 deadline to complete the deal.

Analysts at JPMorgan said while the latest offer is close to the feedback it's heard from investors on an acceptable price, there's still no information around the funding of the partner stake, their roles and their economic interest.

They also say that now that easyJet's board has shown it's willing to entertain offers at an agreed level, a counter bidder could emerge.

Lufthansa (XE:LHA) would have the most complementary network, though it has its own acquisition of ITA Airways to complete, while Wizz Air (UK:WIZZ) has previously bid for easyJet but may not have the balance sheet to support a deal, the analysts said.

Stelios Haji-Ioannou, the founder of easyJet and owner of 15% of the airline, still hasn't said whether he would accept the offer.

Shares of easyJet rival Ryanair (IE:RYA) (RYAAY)rose 3%.

-Steve Goldstein

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07-06-26 0530ET