In surprising, maybe not so surprising update to the "bidding war" between Jetblue Airways & Frontier Airlines for Spirit Airlines. Spirit this morning announced that it will reject Jetblue's takeover offer as it believes does not constitute a “superior proposal.”.The main reason behind Spirit's decision is their concerns about the transaction getting regulatory approval, so the transaction with Frontier represents the best opportunity to maximize value.
Jetblue's & American Airlines Northeast Alliance is currently being reviewed by the DOJ.
In a letter to Jetblue, Mac Gardener, the chairman of Spirit’s board of directors, said “Spirit continues to believe in the strategic rationale of the proposed merger with Frontier and is confident that it represents the best opportunity to maximize long-term shareholder value. After a thorough review and extensive dialogue with JetBlue, the Board determined that the JetBlue proposal involves an unacceptable level of closing risk that would be assumed by Spirit stockholders. We believe that our pending merger with Frontier will start an exciting new chapter for Spirit and will deliver many benefits to Spirit shareholders, Team Members, and Guests.”
This means Spirit will move forward with Frontier's initial offer and that deal is expected to be completed by the second half of 2022.
Jetblue however has decided to up its offer by up to $200 million more plus other incentives to convince Spirit to pick Jetblue. Their updated offer includes: 1. A $200 million reverse break-up fee that would become payable to Spirit in the event that the JetBlue transaction is not consummated for antitrust reasons
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