US airline JetBlue acquires Spirit for $3.8 billion after bidding war
The agreement capped a months-long bidding war and arrives one day after Spirit’s attempt to merge with fellow budget carrier Frontier Airlines fell apart.
(AFP)
Spirit Airlines Inc has agreed to a $3.8 billion buyout offer from low-cost rival
JetBlue Airways Corp, ending a drawn-out battle for the
carrier whose acquisition would help create the fifth-largest
US airline.
Thursday’s announcement comes after Spirit cancelled its $2.7
billion sale to Frontier Group Holdings, but the
potential combination is expected to kick off a fight with
antitrust regulators.
JetBlue’s offer price of at least $33.50 per share
represents a premium of nearly 38 percent to the last closing price of
Spirit shares.
Including a “ticking fee”, or small monthly
payments to Spirit shareholders from January next year until the
deal is completed, the offer can go up to $34.15 per share.
Spirit shares were up nearly 5 percent before the bell as investors
cheered the end of a takeover saga that began in April.
JetBlue rose 1 percent, while Frontier was 1.6 percent higher.
Both carriers were locked in a bidding war to create a
combined airline that will better compete with legacy US
carriers at a time when the industry faces a labour crunch and
high jet fuel costs.
READ MORE: US airlines warn of ‘chaos’ if 5G allowed near airports
JetBlue Airways launches a hostile takeover bid for Spirit Airlines, offering $33 in cash per share pic.twitter.com/4GWn5Hw3MX
— TRT World Now (@TRTWorldNow) May 16, 2022
Antitrust concerns
Spirit had in February agreed to a $2.9 billion offer from Frontier before JetBlue jumped into the fray in April.
Despite JetBlue’s better terms, Spirit had pushed for a merger
with Bill Franke-backed Frontier, citing antitrust concerns with
a potential JetBlue tie-up.
But it could not muster investor support for the deal and
was forced to delay a shareholder vote on the proposed
acquisition four times.
At the latest meet that was set for
Thursday, Spirit shareholders were expected to vote against a
merger with Frontier.
Spirit cancelled the merger with Frontier without giving
details on results of the shareholder meet.
The outcome is a setback for Franke, who was instrumental in
starting the talks with Spirit last year.
Franke’s
airline-focused buyout firm, Indigo Partners, is a major
shareholder in Frontier.
READ MORE:
Airlines worldwide change flights over US 5G problem
Source: Reuters
The agreement capped a months-long bidding war and arrives one day after Spirit’s attempt to merge with fellow budget carrier Frontier Airlines fell apart.
(AFP)
Spirit Airlines Inc has agreed to a $3.8 billion buyout offer from low-cost rival
JetBlue Airways Corp, ending a drawn-out battle for the
carrier whose acquisition would help create the fifth-largest
US airline.
Thursday’s announcement comes after Spirit cancelled its $2.7
billion sale to Frontier Group Holdings, but the
potential combination is expected to kick off a fight with
antitrust regulators.
JetBlue’s offer price of at least $33.50 per share
represents a premium of nearly 38 percent to the last closing price of
Spirit shares.
Including a “ticking fee”, or small monthly
payments to Spirit shareholders from January next year until the
deal is completed, the offer can go up to $34.15 per share.
Spirit shares were up nearly 5 percent before the bell as investors
cheered the end of a takeover saga that began in April.
JetBlue rose 1 percent, while Frontier was 1.6 percent higher.
Both carriers were locked in a bidding war to create a
combined airline that will better compete with legacy US
carriers at a time when the industry faces a labour crunch and
high jet fuel costs.
READ MORE: US airlines warn of ‘chaos’ if 5G allowed near airports
JetBlue Airways launches a hostile takeover bid for Spirit Airlines, offering $33 in cash per share pic.twitter.com/4GWn5Hw3MX
— TRT World Now (@TRTWorldNow) May 16, 2022
Antitrust concerns
Spirit had in February agreed to a $2.9 billion offer from Frontier before JetBlue jumped into the fray in April.
Despite JetBlue’s better terms, Spirit had pushed for a merger
with Bill Franke-backed Frontier, citing antitrust concerns with
a potential JetBlue tie-up.
But it could not muster investor support for the deal and
was forced to delay a shareholder vote on the proposed
acquisition four times.
At the latest meet that was set for
Thursday, Spirit shareholders were expected to vote against a
merger with Frontier.
Spirit cancelled the merger with Frontier without giving
details on results of the shareholder meet.
The outcome is a setback for Franke, who was instrumental in
starting the talks with Spirit last year.
Franke’s
airline-focused buyout firm, Indigo Partners, is a major
shareholder in Frontier.
READ MORE:
Airlines worldwide change flights over US 5G problem
Source: Reuters
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