JetBlue launched a hostile bid to take over Spirit Airlines on Monday and asked low-cost shareholders to reject the proposed acquisition of Frontier Airlines.
JetBlue hopes the move will push the Spirit board over the negotiating table after the council rejected an earlier offer.
Spirit said it would “carefully consider” JetBlue’s bid and plans to make a recommendation to shareholders within 10 business days. Spirit has asked shareholders not to respond to JetBlue until the board has completed its consideration.
JetBlue has offered Spirit shareholders a new offer of $ 30 per share, or more than $ 3.2 billion, to Spirit shareholders, but said a $ 33 share offer from April 5 is still available when Spirit enters negotiations.
Shares of Spirit, based in Miromar, Florida, jumped 13.5%, but still closed well below the JetBlue offer – $ 19.27.
Board of the Spirit rejected JetBlue’s initial bid of $ 3.6 billion May 2, saying antitrust regulators are unlikely to approve a proposal from New York Airlines largely because of it alliance with American Airlines in the northeast. The Justice Department is suing to block the deal.
Shareholders of Spirit Airlines Inc voting is scheduled June 10 at the request of Frontier, for which unanimously supported by the Board of Spirit. The cash and stock offer was valued at $ 2.9 billion when it was announced in February, but since then Frontier shares have fallen 30%, lowering the deal price.
JetBlue said it had lowered the price of its offer due to Spirit’s reluctance to share financial information.
“The Spirit Board was unable to give us the necessary information about the prudence it provided to Frontier and then rejected our proposal in full, which addressed regulatory issues without asking us any questions about it,” JetBlue CEO Robin wrote. Hayes in the letter. The Spiritual Council based its refusal on unfounded claims that are easy to refute. ”
Hayes said JetBlue offers a significant cash premium, more confidence and more benefits to all Spirit investors. He said JetBlue is confident it will receive regulatory approval, and called Frontier’s application high risk and low cost.
Frontier did not respond immediately to a request for comment.
Application Frontier Group Holdings Inc. gives less cash but will allow Spirit shareholders to retain 48.5% of the combined airline. This will give Spirit shareholders 1.9126 shares of Frontier plus $ 2.13 in cash per share of Spirit.
Helan Becker, an analyst at Cowen Banking, said the estimated value of the Frontier-Spirit deal is “a fraction of the value of the offer (JetBlue)” at $ 30 per share in cash.
Any combination involving Spirit will create the country’s fifth largest airline after American, Delta, United and Southwest.
Frontier and Spirit are similar airlines that offer lower fares and profit more from collecting fees for many things. JetBlue is more like the major airlines it hopes to catch. It typically charges higher fares than discounted airlines, but provides more space between rows and adds conveniences including free TV.
The sale of JetBlue will lead to the withdrawal of aircraft and pilots Spirit from the sublime niche of the US aviation industry. However, the acquisition of Spirit Frontier could also be carefully considered. Several prominent Democrats in Congress have warned that the Frontier-Spirit merger could reduce competition and raise tariffs.
Shares of JetBlue Airways Corp. shares of Denver-based Frontier fell 6%.
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