Please try another search
© Reuters. FILE PHOTO: A logo of low cost carrier Spirit Airlines is pictured on an Airbus plane in Colomiers near Toulouse, France, November 6, 2018. REUTERS/Regis Duvignau//File Photo
By David Shepardson
WASHINGTON (Reuters) -JetBlue Airways said Monday it had sweetened its takeover offer for Spirit Airlines (NYSE:SAVE) to $33.50 per share in a bid to convince the ultra-low cost carrier to accept its offer over rival Frontier Airlines' proposal.
The move is the latest salvo in a tussle to create the fifth-largest U.S. airline, helping the buyer compete with larger legacy players at a time when the industry faces labor and aircraft shortages.
Spirit’s board had previously rejected the JetBlue offer, arguing that U.S. anti-trust regulators would not approve a tie up with JetBlue and noting that JetBlue refused to abandon its alliance with American Airlines (NASDAQ:AAL).
But Spirit said last week it was in talks with JetBlue over its offer and expected to decide on the proposal by June 30.
JetBlue's latest bid represents a 68% premium to Frontier's cash and stock offer, whose value stood at $19.99 per share as of Friday. Spirit shares closed up 2% to $21.28 on Friday.
The new proposal is $2 a share higher than its prior offer and includes what JetBlue termed a "stronger divestiture commitment" to complete the Spirit deal but does not include abandoning JetBlue's Northeast Alliance with American Airlines.
Spirit said Monday https://www.businesswire.com/news/home/20220620005590/en/Spirit-Airlines-Board-of-Directors-to-Review-Revised-Proposal-from-JetBlue its board would work with financial and legal advisors "to evaluate JetBlue's revised proposal and pursue the course of action it determines to be in the best interests of Spirit and its stockholders."
REGULATORY SCRUTINY
JetBlue said it made the new offer "at the request of Spirit's board and following completion of JetBlue’s diligence review and discussions with Spirit’s management team."
Last week, Spirit granted JetBlue access to the same due diligence information shared with Frontier after failing to secure enough shareholder support for its deal with the rival suitor.
JetBlue Chief Executive Robin Hayes told Spirit's board in a letter Monday that the airline looks "forward to hearing from you soon and hope to finally move towards signing of definitive documentation for our superior transaction."
Either deal would face intense regulatory scrutiny.
The Justice Department filed an antitrust lawsuit against American and JetBlue in September seeking to end the alliance, saying it would lead to higher fares in busy airports in the U.S. northeast.
Spirit rebuffed an initial $33 a share buyout proposal from JetBlue made in April, which JetBlue later revised to $30 and then to $31.50.
Spirit agreed to engage with JetBlue after the larger airline increased the reverse break-up fee by $150 million to $350 million, payable to Spirit shareholders, in case the deal falls through due to antitrust reasons.
JetBlue has agreed to prepay $1.50 per share of the $33.50 promptly following Spirit shareholders approval for a tie-up.
Spirit, however, continues to be in talks with Frontier under the terms of its existing merger agreement.
Frontier shares closed up Friday 5.8% to $9.34 a share.
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
I feel that this comment is:
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.