JetBlue makes hostile takeover bid for Spirit, trying to block deal with Frontier
Airways is not taking no for an answer from Spirit Airlines, now making a hostile tender offer directly to Spirit’s shareholders.
JetBlue on Monday made its second unsolicited bid to acquire Spirit and thwart its planned merger with rival ultra-low fare carrier Frontier Airlines. Spirit said it would review JetBlue’s new offer, which is required by its fiduciary responsibility to shareholders.
Miramar-based Spirit employs 3,400 people in South Florida and is the largest carrier at Fort LauJetBlue derdale-Hollywood International Airport.
JetBlue’s latest move is a hostile attempt to get Spirit’s stockholders to sell their stock for $30 a share in cash (a little more than $3.2 billion), and that would increase to its original offer of $33 a share if Spirit’s management and board cooperates.
The bid came two weeks after Spirit announced its board rejected JetBlue’s offer and intended to combine with Frontier to create the nation’s fifth-largest airline. In February, Spirit and Frontier announced they would merge, seeking to bring their cheap passenger fares from coast to coast.
Spirit has set a June 10 shareholder vote on its merger with Frontier and urged shareholders to approve the deal. JetBlue filed a proxy statement Monday to urge Spirit shareholders to “vote no” to the SpiritFrontier union, calling the $2.9 billion cash-and-stock deal, “inferior, high risk and low value.”
“Given the Spirit Board of Directors’ complete unwillingness to share the same necessary diligence information that was shared with Frontier, JetBlue is now offering to acquire Spirit for $30 per share in cash through a fully financed tender offer,” JetBlue said in a statement, noting that its offer is a
60% higher premium than Frontier’s. “JetBlue is fully prepared to negotiate in good faith a consensual transaction at $33, subject to receiving necessary diligence.”
Early this month, JetBlue said it also was offering Spirit a $200 million breakup fee if federal regulators blocked its acquisition of the Broward County airline due to antitrust reasons. Ultimately, federal regulators would have to approve any deal that Spirit and an airline partner agreed on. That evaluation would take at least 18 to 24 months.
Spirit and Frontier share a similar deep discount business model and have had overlapping executives and investors. Indigo Partners, a private-equity group, first owned a controlling share of Spirit from 2006 to 2013, before selling its interest and buying the majority of Frontier. Last year, Indigo took Frontier public, selling shares to investors.
Frontier CEO Barry Biffle was Spirit’s chief marketing officer from 2008 to 2016. The co-founder of Indigo is chairman of Frontier’s board of directors, and some of Spirit’s directors have ties to Indigo. In a letter to Spirit’s shareholders, JetBlue claimed the “longstanding relationships” between Spirit and Indigo are why Spirit won’t engage in talks about a deal with JetBlue.
Spirit’s stock jumped $2.31 a share Monday on takeover speculation, closing at $19.27. Frontier’s stock added $.51, closing at $9.23, while JetBlue shares fell $.61 to $9.45.