Spirit’s board rejects JetBlue’s higher takeover bid, moving ahead with Frontier deal
South Florida-based Spirit Airlines said Monday its board of directors continues to back Frontier Airlines’ $2.9 billion takeover bid after determining that a competing, unsolicited $3.6 billion proposal from JetBlue Airways is an inferior deal.
Spirit said its directors concluded after consulting with legal and financial advisers that New York-based JetBlue’s surprise offer “is not reasonably capable of being consummated.” The board’s decision was unanimous, Spirit said.
Spirit employs 3,400 workers in South Florida and it is the largest carrier at Fort Lauderdale-Hollywood International Airport, according to February passenger traffic, followed by JetBlue, Southwest and Delta.
In a letter sent to JetBlue, Spirit Chairman Mac Gardner said that the rival discount airline’s bid had “an unacceptable level of closing risk” that shareholders would have to take on.
“The Board continues to believe that the pending transaction with Frontier represents the best opportunity to maximize value and recommends that Spirit shareholders adopt the merger agreement with Frontier,” Spirit said in a prepared statement.
JetBlue Airways made its unsolicited all-cash offer of $33 a share to acquire Spirit in April, two months after Miramar-based Spirit announced it planned to merge with discount competitor Denver-based Frontier.
Either a Spirit-Frontier merger or JetBlue devouring Spirit would create the nation’s fifth-largest airline. Both deals would consolidate the market, but neither combination would come close to the size of the big four airlines in the United States: American Airlines, United, Delta and Southwest.
READ MORE: Here’s what you need to know about Spirit, Frontier and JetBlue
Shares of Spirit Airlines Inc. fell 7.5% before the market opened Monday. Spirit’s stock fell further, to close Monday down $2.21 (or 9.4%) at $21.40 a share. Shares of Frontier Group Holdings Inc. declined $.40, to finish the session at $10.21, while JetBlue Airways Corp.’s stock edged higher by $.29, closing at $11.30 a share. Frontier’s stock had closed Friday at $22.42 a share, making its stock-and-cash deal worth slightly less than when it was announced in February.
Spirit said it expects to close the Frontier deal in the second half of 2022.
JetBlue said Monday it was offering Spirit a $200 million break-up fee, if federal regulators would block its acquisition of the Broward County airline due to antitrust reasons. That did not persuade Spirit’s board, however.
Ultimately, federal regulators would have to approve any deal Spirit and an airline partner agreed on. That evaluation would take at least 18 to 24 months.
When the Frontier deal was announced Feb. 7, the airlines said once the deal was completed Frontier would control 51.5% of the Spirit stock, leaving analysts and investors to speculate Frontier would emerge as the dominant airline.
This story was originally published May 2, 2022 at 11:18 AM.