Skift Take
The race to develop the nation’s fifth-largest airline company is getting hotter as both Frontier and JetBlue continue to up their bid for Spirit Airlines. After Frontier’s latest move, will JetBlue come up with something before the investors vote on June 30?
Peden Doma Bhutia
Spirit Airlines Inc on Friday urged its investors to back a merger handle Frontier Group Holdings at a conference next week after Frontier enhanced its deal for the ultra-low-cost carrier.
Spirit is the topic of a bidding war between Frontier and JetBlue Airways Corp.
. Both bidders see Spirit as an opportunity to broaden their domestic footprints at a time when the U.S. airline company industry is dogged by labor and aircraft shortages. Either of the offers would develop the fifth-largest U.S. airline company.
Under the modified terms, Frontier will bump up the cash component of the deal by $2 per share to $4.13 per share, along with 1.9126 Frontier shares in the cash-and-stock deal. Frontier will prepay $2.22 per share as a money dividend to Spirit shareholders following approval of the deal.
Denver-based Frontier has likewise increased its reverse termination charge to Spirit by $100 million to $350 million.
Spirit investors are due to vote on the merger handle Frontier on June 30.
Florida-based Spirit has consistently turned down JetBlue’s offer, stating it has a low possibility of winning approval from U.S. regulators.
Yet, JetBlue has actually not given up on its mission, and has been trying to convince Spirit shareholders to vote against the deal with Frontier.
On Monday, New York-based JetBlue sweetened its deal for Spirit by $2 to $33.50 per share in cash. Frontier’s deal, at its closing price on Friday, is worth $24.29 in stock and money.
“A JetBlue deal deals with considerably greater regulatory impediments than a Frontier transaction,” Spirit said.
In a declaration late on Friday, JetBlue said it continued to think its proposal transcended to Frontier’s, however said it will “more thoroughly” review and evaluate the modified regards to Frontier’s proposal.
Both the deals are expected to deal with extreme regulatory analysis. However JetBlue’s Northeast Alliance partnership with American Airlines is a sticking point with Spirit.
The Justice Department has actually sued JetBlue and American to unwind the partnership. Spirit has asked JetBlue to drop the collaboration if it desires an offer, but JetBlue decreased.
Frontier stock closed up 6.6 percent on Friday at $10.54, while Spirit ended up 2.9 percent to $24.52. JetBlue shares acquired 5.8 percent to close at $8.62.
(Reporting by David Shepardson in Washington, Rajesh Kumar Singh in Chicago and Akash Sriram in Bengaluru; extra reporting by Jaiveer Singh Shekhawat in Bengaluru; Editing by Matthew Lewis and Leslie Adler)
This post was written by David Shepardson and Rajesh Kumar Singh from Reuters and was lawfully licensed through the Market Dive Content Market. Please direct all licensing questions to [email protected]