EasyJet agrees to $6.7 billion takeover by U.S. private equity firm

EasyJet has agreed to be acquired by U.S. private equity firm Castlelake in a deal that values the U.K. budget airline at £5 billion ($6.7 billion).

EasyJet’s board of directors and Castlelake said on Sunday they had reached an agreement in principle after the carrier had previously rejected four earlier bids from the firm. EasyJet shares jumped nearly 10% Monday on the London Stock Exchange. 

EasyJet’s board said it was “minded to recommend” Castlelake’s £6.90-per-share offer to shareholders. Castlelake must submit a formal takeover bid by August 3 or withdraw its offer. 

“Castlelake has emphasized its tremendous respect for EasyJet and its people, along with its intention to support its future growth and transformation to a stronger, more resilient European airline,” the airline said in a statement. “Castlelake is supportive of EasyJet’s fleet modernization program, which it regards as central to the company’s long-term competitiveness, efficiency and sustainability objectives.”

EasyJet, whose main U.K. hub is London Gatwick Airport, was founded in 1995 by entrepreneur Stelios Haji-Ioannou, and grew quickly on the strength of its no-frills, low-cost flights around Europe. Recently, the carrier has faced challenges, including soaring jet fuel costs stemming from the Iran war, that have cut into airline profits.

Minneapolis-based Castlelake manages roughly $37 billion in assets and leases its fleet of 375 planes to hundreds of global airlines.