easyJet has caved in and finally agreed in principle to Castlelake's latest improved takeover proposal of 690 pence a share, valuing the budget airline at around £5.5bn.

Investment firm Castlelake has been gradually increasing its offer from an initial 560p bid, with its fifth bid representing a premium of more than 70% to its share price before takeover interest emerged in late May.

The airline's board said on Sunday it would be “minded to recommend the offer” to shareholders if Castlelake makes a firm bid on the agreed financial terms, subject to due diligence, definitive documentation and regulatory approvals. The proposal includes a partial unlisted share alternative.

Shares in easyJet rose around 10% following the announcement.

Castlelake, which already owns a 2.14% stake in easyJet through the funds it manages, said it intended to support easyJet's long-term growth, including its fleet modernisation programme, while taking the airline private could provide greater flexibility away from the pressures of public markets. easyJet operates around 370 aircraft across the group and employees more than 19,000 people. For its most recent full financial year, ended 30 September 2025, easyJet reported group revenue of more than £10bn.

The deadline for Castlelake to now announce a firm offer or walk away has been extended to 3 August. The proposed deal is expected to face regulatory scrutiny, including over EU airline ownership rules requiring majority European ownership.

If completed, the acquisition would also result in another high-profile departure from the London stock market, amid continued concerns over UK-listed companies becoming attractive takeover targets because of relatively low valuations.

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