By Scott Kanowsky
Investing.com -- Shares in Spirit Airlines (NYSE:SAVE) rose sharply on Tuesday after JetBlue Airways (NASDAQ:JBLU) sweetened its takeover offer for the U.S. budget carrier.
JetBlue's latest proposal comes ahead of a special meeting of Spirit shareholders on June 30th, where they will likely vote on a rival bid from low-cost airline Frontier.
On Monday, JetBlue unveiled a new all-cash bid of $33.50 per share - an increase of 6.3% compared to its previous proposal and a 68% premium to the implied value of Frontier's cash-and-stock offer. It also said it would now pay $350M if the deal is eventually blocked over antitrust fears, up from Frontier's offer of $250M in early June.
JetBlue added it would accept more divestments to counter potential regulatory concerns, including a plan to sell Spirit's assets in New York and Boston. JetBlue already has a strong presence in the U.S. Northeast through a separate deal with American Airlines (NASDAQ:AAL) that is already the subject of a Justice Department lawsuit. In its latest offer, JetBlue did not commit to abandoning that alliance to secure its purchase of Spirit.
“Our previous proposal was met with an extremely positive reaction from Spirit stockholders, and we believe they will be even more pleased with these improved terms, including additional regulatory commitments that reflect our confidence in our ability to obtain antitrust approval and are a direct result of our diligence," said JetBlue CEO Robin Hayes in a statement.
Shares in JetBlue edged lower in early U.S. trading, while Frontier Group Holdings, Inc. (NASDAQ:ULCC) shares moved slightly higher.