Spirit reviews latest JetBlue counteroffer
Move by airliner is just days ahead of a scheduled Friday vote by shareholders
Hours after Spirit Airlines received a revised takeover bid from JetBlue Airways, the South Florida-based carrier said Monday its board of directors would review it.
The move by JetBlue, which has been waging a hostile bid for Spirit in a now weeks-old battle against Frontier Airlines of Denver, is just days ahead of a scheduled June 10 vote by Spirit shareholders to decide on whether to accept a bid from Frontier.
In a statement Monday, JetBlue said it would provide a $350 million reverse breakup fee to Spirit “in the unlikely event the transaction is not consummated for antitrust reasons.”
The airline noted the fee represents an increase of $150 million over the one it originally offered, and exceeds the $250 million fee offered by Frontier by $100 million. JetBlue also added an incentive. It's an upfront payment of $164 million payable in cash following a positive vote approving its proposed buyout.
Spirit almost immediately said its board would take a look.
“The Spirit board of directors will work with its financial and legal advisors to evaluate JetBlue's proposal and pursue the course of action it determines to be in the best interests of Spirit and its stockholders,” the Miramar-based airlines said in a statement. “The board will conduct this evaluation in accordance with the terms of the company's merger agreement with Frontier and respond in due course. Spirit shareholders do not need to take any action at this time.”
A reverse breakup fee refers to the amount of money paid to a targeted company if the would-be acquirer backs out of a proposed deal, or if other factors cause the deal to fall apart. In any event, the shareholders would be compensated.
In a letter to Spirit board's members Monday, JetBlue CEO Robin Hayes again sought to win them over, saying his carrier's bid is now “superior” to Frontier's.
“Combining JetBlue and
Spirit would create a true national competitor to the dominant legacy carriers, delivering low fares and a great experience for more customers, more opportunities and good paying jobs for crew members, and more value for stockholders,” he said. “The key features of our Improved proposal – the up-front cash payment and increased reverse break-up fee – reflect the seriousness of our commitment and underscore our confidence in completing this transaction.”
JetBlue, which is a competitor of Spirit and Frontier at Fort Lauderdale-Hollywood International Airport, Palm Beach International Airport and Miami International Airport, originally offered $33 a share, or $3.6 billion cash for Spirit in April. The bid was well above a $2.9 billion cashand-stock deal that Frontier made for Spirit.
Last Monday, Frontier placed a reverse breakup fee on the table for the first time. Totaling $250 million, it surpassed the original fee of $200 million offered by JetBlue.