easyJet has extended Castlelake's deadline to make a firm takeover offer until 7 August, aligning it with rival bidder Apollo, as the airline keeps both suitors in the running for a potential acquisition.

The airline said the panel on takeovers and mergers had agreed to extend Castlelake's "put up or shut up" deadline from 3 August to 7 August.

Both Castlelake and Apollo must now announce by 5pm on Friday whether they intend to make a firm offer or walk away, increasing the likelihood of a competitive bidding war.

The shares rose around 2.5% in early trading on the likelihood of an improved offer before Friday's deadline.

Apollo's indicative proposal values easyJet at about £5.7bn and remains the leading bid, although the market continues to price in execution and regulatory risks until a firm offer is made.

The latest decision follows Apollo's agreement in principle on the financial terms of a possible £7.15 per share cash offer in July, which prompted the easyJet board to withdraw its support for Castlelake's lower £6.90 per share proposal. The budget carrier has since been providing due diligence access to both parties.

easyJet reiterated there is no certainty that either bidder will make a firm offer and advised shareholders to take no action.

As of early August, easyJet's largest shareholder is still the Haji-Ioannou family, the airline's founding family, with roughly 15.5% of the company, followed by investment funds and similar corporate entities, including Hargreaves Lansdown Asset Management and Aberdeen Group.

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