Rebuffed by Spirit, Jetblue goes hostile

Takeover bid asks shareholders to reject Frontier Airlines plan

Jetblue launched a hostile takeover bid for Spirit Airlines on Monday and asked shareholders of the low-cost carrier to reject a proposed acquisition by Frontier Airlines.

Jetblue hopes that its move will push Spirit’s board to the negotiating table after the board rejected an earlier offer.

Spirit said that it will “carefully review” Jetblue’s tender offer and plans to make a recommendation to shareholders within 10 business days. Spirit asked the shareholders not to sell their shares to Jetblue until the board finishes the review.

Shares of Spirit, based in Miramar, Fla., jumped 13 percent in afternoon trading.

Jetblue pitched a new offer of $30 per share in cash, or more than $3.2 billion, to Spirit stockholders but said its April 5 offer of $33 per share is still available if Spirit enters negotiations.

Spirit’s board rejected Jetblue’s original $3.6 billion bid May 2, saying antitrust regulators are unlikely to approve an offer from the New York City airline because of its alliance with American Airlines in the Northeast. The Justice Department is suing to block that deal.

Shareholders of Spirit Airlines Inc. are scheduled to vote

June 10 on the Frontier bid, which is favored unanimously by the Spirit board. The cashand-stock offer was valued at $2.9 billion when announced in February, but Frontier’s shares have dropped 30 percent since, reducing the value of the deal.

Jetblue said it reduced the price of its offer because of Spirit’s unwillingness to share financial information.

“The Spirit Board failed to provide us the necessary diligence information it had provided Frontier and then summarily rejected our proposal, which addressed its regulatory concerns, without asking us even a single question about it,” Jetblue CEO Robin Hayes wrote in a letter. “The Spirit Board based its rejection on unsupportable claims that are easily refuted.”

Hayes said Jetblue is offering a significant premium in cash, more certainty, and more benefits for all Spirit investors. He said Jetblue is confident of winning regulatory approval, and called the Frontier bid high risk and low value.

Frontier did not respond to a request for comment.

The bid from Frontier Group Holdings Inc. provides less cash but would let Spirit shareholders keep 48.5 percent of the combined airline. It would give Spirit shareholders 1.9126 shares of Frontier plus $2.13 in cash for each Spirit share.

Shares of Jetblue Airways Corp. fell almost 5 percent while shares of Frontier, based in Denver, climbed more than 7 percent in afternoon trading.