• ‘JetBlue’s own business is in disarray,’ Spirit says
• Spirit Board is ignoring tender offer to protect Frontier’s inferior deal - JetBlue
Spirit Airlines Inc (NYSE: SAVE) on Thursday urged shareholders to reject JetBlue Airlines Corp’s (NASDAQ: JBLU) hostile bid, saying it was “a cynical attempt to disrupt” its merger with Frontier Group Holdings Inc (NASDAQ: ULCC).
JetBlue launched a hostile takeover bid on Monday after Spirit earlier this month rejected its surprise $33-a-share, all-cash acquisition offer.
The New York-based JetBlue proposed a tender offer for $30 a share and said it is superior to the value of Frontier’s cash-and-stock deal and also said, “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.”
Spirit’s board reviewed the new tender offer and said that the company determined it “is NOT in the best interests of Spirit and its stockholders.”
Shareholders of Spirit are set to vote on Frontier’s offer, which currently values Florida-based airlines at about $20.33 per share.
JetBlue, in early April, made a $3.6 billion acquisition proposal to Spirit to better compete with the “Big Four” US airlines that control nearly 80% of the passenger market.
On Thursday, shares of both Spirit and JetBlue surged in the New York trading session. While Spirit jumped more than 1.6% to $19.70 at 2.30 pm ET, JetBlue jumped almost 5% to $10.40.
JetBlue’s counter-response
The sixth-largest US passenger carrier, JetBlue, earlier said it would operate Spirit under the JetBlue brand but promised a $200 million reverse breakup fee if the deal did not go through for antitrust reasons.
“During the extensive discussions held between Spirit and JetBlue, JetBlue itself admitted that a lawsuit from DOJ seeking to block the merger was a 100% certainty; therefore, JetBlue would have to prevail or settle (which would be contrary to DOJ’s avowed enforcement approach) in order to consummate its proposed acquisition of Spirit,” Spirit said in a statement.
JetBlue, on Thursday, responded to Spirit and said, “both deals are subject to regulatory review, and both deals have a similar risk profile... Frontier offers less value, more risk, and no regulatory commitments, despite a similar regulatory profile.”
The New York-based JetBlue also reiterated its argument, saying that the “Spirit Board, driven by serious conflicts of interest, continues to ignore the best interests of its shareholders by distorting the facts to distract from their flawed process and protect their inferior deal with Frontier.”
“JetBlue’s focus on Spirit appears to be an attempt to distract from the fact that JetBlue’s own business is in disarray,” Spirit said.
Spirit also mentioned that JetBlue stockholders “obviously agree that their company’s quixotic offer for Spirit is a dead-end, posing substantial risks to their own business,” adding that JetBlue’s stock price had fallen about 34% since March 29.
Picture Credit: Seeking Alpha
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