Spirit Airlines Inc. SAVE has abruptly postponed its Friday stockholder vote on its merger with Frontier Group Holdings ULCC after JetBlue Airways JBLU expanded its unsolicited offer to buy the carrier.
What Happened: Spirit and Frontier announced merger plans in February in a deal valued at $6.6 billion; the combined entity would become the nation’s fifth-largest airline.
JetBlue made an unexpected all-cash $3.6 billion takeover offer last month that was 33% higher than Frontier’s $2.9-billion offer.
The Spirit board of directors rejected JetBlue’s inquiry, claiming the transaction would not be completed. On Monday, JetBlue CEO Robin Hayes sent a letter to Spirit’s board pledging 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.”
He also promised that his company 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.
What Happened Next: Spirit has repeatedly pushed JetBlue away in favor of a previously announced merger with Frontier, which was scheduled to be voted upon this Friday, June 10. That vote has now been delayed until June 30.
Spirit gave no explanation on why the meeting was delayed, although in a press statement it insisted that it “remains bound by the terms of the merger agreement with Frontier, and Spirit's board has not determined that either JetBlue's unsolicited tender offer or its updated proposal received on June 6 constitutes a Superior Proposal as defined in the merger agreement with Frontier and has made no change to its recommendation that Spirit stockholders adopt the merger agreement with Frontier.”
Photo: Tomás Del Coro/Flickr Creative Commons.
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