Spirit Airlines delays shareholder meeting on merger with Frontier
Spirit Airlines announced Wednesday it has postponed a Friday meeting in which shareholders were slated to vote on a plan to merge with Frontier Airlines. The meeting was moved to June 30.
The announcement comes two days after JetBlue Airways, which has its own plan to acquire Spirit, sweetened its offer for the carrier by $150 million, saying it would pay Spirit $350 million in the “unlikely” event that a merger between the two carriers failed to win regulatory approval. A portion of that reverse breakup fee would include a cash payment to shareholders.
That revised proposal came after Frontier said last week that it would offer a $250 million breakup fee if its proposed deal with Spirit wasn’t approved by regulators.
Spirit said the delay will give its board of directors time to continue discussions with Spirit shareholders, as well as with Frontier and JetBlue.
“I know this delay may be frustrating — I’m sure you were eager to hear the results of the shareholder vote and have a better idea of what lies ahead,” Spirit chief executive Ted Christie wrote in a note to employees Wednesday. “Let me reassure you as we go through this process, we remain focused on the well-being of our Spirit family.” Christie said
Spirit remains bound by the terms of its merger agreement with Frontier and has not determined that JetBlue’s unsolicited tender offer or its updated proposal received Monday “constitutes a Superior Proposal as defined in the merger agreement with Frontier.”
In a news release, Spirit, which is based in Miramar and employs 3,400 workers in South Florida, said it continues to recommend that shareholders adopt the merger agreement with Frontier. Even so, JetBlue chief executive Robin Hayes said he took the delay as a positive sign.
“We welcome this development as a necessary first step toward genuine negotiations between the Spirit Board and JetBlue,” he said in a statement. “Spirit shareholders are clearly urging the Spirit Board to engage with us constructively and provide us with the same information previously made available to Frontier so that we can reach a consensual transaction.”
Representatives for Frontier said the carrier had no comment.
The reverse breakup fees offer Spirit investors an insurance policy if regulators block either deal. While JetBlue is offering more money, Spirit’s board has rejected the proposal because of concerns that it can’t pass regulatory scrutiny – particularly as the Biden administration’s Justice Department is taking a more aggressive look at consolidation in several industries.
A Frontier-Spirit merger also would face scrutiny, but Spirit’s board has indicated it believes that deal has a better chance of being approved.
American Airlines, Delta Air Lines, United Airlines and Southwest Airlines dominate the domestic industry, and many consumer advocates are concerned that the loss of another carrier could reduce competition and could lead to higher fares. A Spirit merger with either JetBlue or Frontier would create the nation’s fifth-largest airline.