Castlelake offered easyJet shareholders £6.90 per share. The stock closed at £3.99 on May 29. That's a 73% premium. Math checks out. The premium exists because easyJet was trading like a airline that flies budget passengers to Málaga, which it is.
The bid values easyJet at $7.3 billion. Castlelake looked at an airline with orange planes and thought yeah, seven billion sounds right. They run a private equity firm. They know better. They did it anyway.
EasyJet's board is ready to accept. Ready means they already called their wealth managers to ask about capital gains strategies. The shareholders get a 73% pop for doing nothing except owning a stock that got beaten down so badly that a 73% gain still leaves them below where they were two years ago.
Retail traders saw the headline and bought Ryanair by accident. Different orange airline. Wrong ticker. They'll figure it out when the merger closes and their shares are still worth £2.80.
Castlelake specializes in aviation and infrastructure. They own planes. They lease planes. Now they want to own the company that operates planes they might already own. Vertical integration for a firm that makes money whether the planes fly or sit on a tarmac accruing storage fees.
The premium sounds generous until you remember easyJet traded at £11 in 2018. Shareholders who bought at the top and held through COVID, fuel spikes, and strikes get to sell at £6.90 and call it a win. That's not a premium. That's a ransom payment.
The deal closes and some analyst will write that Castlelake saw value where the market didn't. The market saw an airline. Castlelake saw an airline trading for less than the planes it already owned, did the math, and sent a f*cking fax.
Photo by Winston Tjia on Unsplash
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