JetBlue (JBLU) Urges Spirit (SAVE) Shareholders to Vote 'No' on Frontier (ULCC) Transaction, Launches Hostile Takeover Bid

May 16, 2022 6:41 AM EDT

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JetBlue Airways (NASDAQ: JBLU) announced will launch a hostile takeover bid for Spirit Airlines (NYSE: SAVE) after the ultra-low-cost carrier turned down JetBlue's $3.6 billion bid to pursue a merger deal with Frontier Airlines (NASDAQ: ULCC).

JetBlue is launching a tender offer to acquire shares of Spirit’s stockholders in an effort to pressure the company’s management to restart negotiations. In the meantime, the Long Island City-based airline is also asking Spirit shareholders to vote against the carrier’s planned merger deal with Frontier Group on June 10.

“JetBlue offers more value – a significant premium in cash – more certainty, and more benefits for all stakeholders. Frontier offers less value, more risk, no divestiture commitments, and no reverse break-up fee, despite more overlap on non-stop routes and their own regulatory challenges. Yet the Spirit Board failed to provide us the necessary diligence information it had provided Frontier and then summarily rejected our proposal, which addressed its regulatory concerns, without asking us even a single question about it. The Spirit Board based its rejection on unsupportable claims that are easily refuted,” said JetBlue CEO Robin Hayes.

JetBlue is offering $30 per share in cash and said it would be open to raising that price to $33 per share if Spirit agrees to negotiate and provides the requested data.

“If the Spirit shareholders vote against the transaction with Frontier and compel the Spirit Board to negotiate with us in good faith, we will work towards a consensual transaction at $33 per share, subject to receiving the information to support it,” Hayes added.

The tender offer is due to take effect on May 16 and stay open until June 30, according to the reports, adding that JetBlue has already started meeting with certain Spirit shareholders.

Both Frontier Airlines and JetBlue have been fighting vigorously for Spirit, underscoring the importance of the ultra-low-cost carrier to their growth plans. Additionally, the merger with either Frontier or JetBlue would also allow the two rivals to challenge other major U.S. carriers and would create the fifth-largest airline in the country.

But Spirit CEO Ted Christie has raised questions over JetBlue’s actual intentions, saying he fails to see why would antitrust regulators approve the merger while JetBlue continues to deal with regulatory scrutiny over its separate deal with American Airlines.

“I have wondered whether blocking our deal with Frontier is, in fact, their goal,” said Christie.

By Senad Karaahmetovic



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