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• ISS says JetBlue’s offer is superior from financial standpoint
• Both potential deals are expected to face antitrust pushback
Proxy advisory firm Institutional Shareholder Services Inc (ISS) on Tuesday has urged Spirit Airlines Inc’s (NYSE: SAVE) shareholders to vote against the $2.9 billion proposed merger with Frontier Group Holdings (NASDAQ: ULCC).
JetBlue Airways Inc’s (NASDAQ: JBLU) competing offer of a $30-a-share all-cash deal is financially superior and meaningfully higher premium than the cash-and-stock deal from Frontier, the report said.
Frontier’s offer for each share of the discount carrier stood at $22.31 on Tuesday.
The news comes after Spirit, earlier this month, urged its shareholders to reject JetBlue’s hostile bid, saying it was “a cynical attempt to disrupt” its merger with Frontier.
“The (Spirit) board’s view that a Frontier merger has a safer path to regulatory approval is not supported by any guarantee of value for shareholders in the event of regulatory rejection,” the prominent shareholder advisory firm said in the report.
The advisory firm also said the board’s decision to forgo an auction process is concerning, and shareholders of the discount carrier may question the board’s failure to negotiate a reverse termination fee with Frontier regarding the potential regulatory risk and JetBlue’s offer of a $200 million termination fee.
Jetblue on Tuesday responded to the ISSS report and said that the “report highlights the flawed process that the conflicted Spirit Board followed, which only underscores the need for Spirit’s Board to now come to the table and negotiate.”
Picture Credit: CNBC
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