Spirit renews support for Frontier merger after it boosts offer
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SPIRIT Airlines said on Friday (Jun 24) it has renewed its support for a merger deal with Frontier Group after Frontier raised its cash offer by US$2 per share to buy the rival ultra-low-cost carrier, according to a regulatory filing.
On Monday, JetBlue Airways sweetened its takeover offer for Spirit to US$33.50 per share, an increase of US$2, as it sought to convince Spirit’s board to agree to its deal. Frontier’s offer, at its closing price on Friday, is worth US$24.29 in stock and cash.
Spirit’s board said on Friday that based on the improved offer from Frontier it “reiterates its unanimous recommendation that Spirit stockholders vote” in favour of the merger.
In a statement late on Friday, JetBlue said it continued to believe its proposal was superior to Frontier’s, but said it will “more thoroughly” review and assess the revised terms of Frontier’s proposal.
Spirit shareholders are set to vote on the Frontier takeover proposal on Wednesday.
Frontier stock closed up 6.6 per cent on Friday at US$10.54, while Spirit finished up 2.9 per cent to US$24.52. JetBlue shares gained 5.8 per cent to close at US$8.62.
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The carriers have been involved in a tussle to create the fifth-largest US airline, helping the buyer compete with larger legacy players at a time when the industry faces labour and aircraft shortages.
Under the terms of the offer, Frontier would pay US$4.13 in cash, an increase of US$2, and 1.9126 shares of Frontier per Spirit share. Frontier has agreed that US$2.22 per share will be prepaid to Spirit stockholders as a cash dividend following approval of the transaction.
Frontier also increased its reverse termination fee to US$350 million to Spirit if the deal is not completed for antitrust reasons.
Spirit’s board had previously rejected the JetBlue offer, arguing that US antitrust regulators would not approve a tie-up with JetBlue and noting that JetBlue refused to abandon its alliance with American Airlines.
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 US Northeast. REUTERS
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