JetBlue Airways JBLU has upped the ante on its unsolicited acquisition of Spirit Airlines Inc. SAVE as Spirit pushes ahead on a planned merger with Frontier Group Holdings Inc. ULCC.
What Happened: In a letter to the Spirit board of directors, JetBlue CEO Robin Hayes pledged a $350 million reverse break-up fee, or $3.20 per Spirit share, that would be “payable to Spirit in the unlikely event the transaction is not consummated for antitrust reasons.”
Hayes defined his offer as an “an increase of $150 million, or $1.37 per Spirit share, to the reverse break-up fee JetBlue previously offered to pay; and approximately 15% of Spirit’s unaffected share price, and approximately 78% of the original premium offered by Frontier.”
Hayes also promised that JetBlue would prepay approximately $164 million, or $1.50 per share, of the reverse break-up fee as a cash dividend to Spirit stockholders if they approve JetBlue’s takeover bid.
Why It Happened: JetBlue’s offer follows the June 2 Frontier announcement it would pay a reverse termination fee of $250 million, or $2.23 per share, to Spirit in the event federal regulators block the merger.
However, Hayes insisted his updated offer “reflects the seriousness of our commitment and underscores our confidence in completing this transaction.”
What Happens Next: Spirit has yet to display any enthusiasm for JetBlue’s outreach. On Friday, the company released a press statement declaring that the “leading independent proxy advisory firm Glass, Lewis & Co.” recommended the merger with Frontier while adding a jab at JetBlue.
“Glass Lewis shares our board’s view that the Frontier transaction has an easier path to close and provides third party validation that JetBlue may have ulterior motives behind its offer,” said Spirit President and CEO Ted Christie.
Spirit shareholders vote on the Frontier merger on June 10.
Trading Action: During premarket on Monday, Frontier shares are trading at $9.92 and JetBlue shares opened at $10.59, according to Benzinga Pro.
Photo courtesy of JetBlue
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