EasyJet has reached an agreement in principle with US investment firm Castlelake on a proposed takeover valued at up to £5.5 billion (€6.42 billion), with the Luton-based carrier's board indicating it would be minded to recommend the £6.90-per-share offer to shareholders should a formal bid be tabled.

According to the Irish Independent, shares in easyJet jumped more than 10% in early trading following the announcement. Castlelake now has until 5pm on 3 August to submit a formal offer or withdraw under City takeover rules, following an extension requested by easyJet.

The fifth approach from Castlelake follows four previous rejected proposals, the most recent of which was pitched at £6.50 per share. Earlier offers were tabled at £6.25, £6.00 and £5.60 per share. EasyJet had previously dismissed Castlelake's interest as an attempt to buy the airline on the cheap.

In connection with the fifth proposal, easyJet said Castlelake had provided assurances including a best-endeavours commitment to obtain all regulatory clearances required to complete the transaction, and confirmed its intention to support the airline's fleet modernisation programme and future growth.

Irish aviation executives Peter Bellew and Mark Breen are part of the Castlelake consortium, serving as EU national individual investors to satisfy European airline ownership requirements. Bellew previously served as chief operating officer of easyJet between 2020 and 2022, and has also held roles at Ryanair and Riyadh Air. Breen is chief executive of Dublin-based Oneiros Aerospace and has worked with carriers including Oman Air.

Castlelake, led by executive chairman and founder Rory O'Neill, manages assets worth $36 billion (€31.5 billion). The firm has previously acquired a stake in collapsed Scandinavian Airlines before selling to Air France-KLM, and held talks with bankrupt US carrier Spirit Airlines earlier this year.

EasyJet was founded in 1995 by Sir Stelios Haji-Ioannou, who retains a shareholding of more than 15% alongside his family and stands to receive a significant windfall if the transaction is completed. The airline has been targeting pre-tax profits in excess of £1 billion in the medium term, with a growing package holidays division forming a central part of its commercial strategy.

A formal offer remains subject to customary pre-conditions including due diligence and agreement of offer documents.