EasyJet's board of directors has reached an agreement in principle with US investment firm Castlelake over a potential takeover offer valued at approximately £5.2 billion.

The tentative agreement comes after EasyJet's board had previously rejected four earlier takeover bids from Castlelake, which holds a small stake in the airline. The company had accused Castlelake of attempting to acquire EasyJet "on the cheap," with previous offers ranging from £5.60 to £6.50 per share.

The latest proposal, put forward on July 4 and agreed to in principle on Sunday, is worth £6.90 per share. While this marks a significant step, the deal is not yet confirmed. Castlelake must now secure necessary regulatory clearances and approvals for the transaction to proceed.

A key hurdle is ensuring compliance with EU ownership rules, which mandate that a European company must be at least 51% owned by a European entity. Castlelake, being a US firm, has outlined its strategy to meet this requirement. The investment firm has until August 3 to either formally announce a firm intention to make an offer or withdraw its bid.

EasyJet's board stated that the financial terms of the current proposal are at a level they "would be minded to recommend" to EasyJet shareholders, should a firm offer be submitted. The airline's shares closed on Friday at £5.58, and had fallen by over 30% in the year prior to the emergence of the first bid in June.

Castlelake, which manages assets worth $36 billion (£27.3 billion), has expressed "tremendous respect" for EasyJet and its employees. The firm indicated its intention to support the airline's future growth and its transformation into a more resilient European carrier.

EasyJet, one of Europe's largest low-cost airlines, employs over 19,000 people and operates approximately 1,200 routes across 35 European countries. The company had previously attributed some of the recent depression in its share price to the impact of geopolitical events, such as the conflict between the US and Iran, on the travel sector.

If the offer progresses and is accepted by shareholders, it would represent a significant shift for the Luton-based airline, potentially leading to a change in ownership and strategic direction under Castlelake's management.