JetBlue goes hostile with reduced $3.3b Spirit Airlines bid

Bloomberg

JetBlue Airways Corp made a hostile $3.3 billion cash bid for Spirit Airlines Inc, appealing directly to shareholders in an effort to prevail over a rival offer for the discount carrier by Frontier Group Holdings Inc.
The JetBlue proposal is worth $30 a share, $3 less than its initial approach, which was spurned by Spirit’s board two weeks ago. The New York-based company said it will pay the higher price should a “consensual transaction” be agreed. JetBlue’s latest offer is a 77% premium to the value of Spirit’s closing price.
“This signals that the original JetBlue offer was a serious one, as opposed to one just trying to scuttle the Spirit-Frontier deal,” said Savanthi Syth, a Raymond James Financial Inc analyst.
The move marks the latest twist in the takeover tussle for Miramar, Florida-based Spirit. JetBlue is banking on the acquisition as its best shot at near-term growth, even though the deal would mean combining its own full-service product with a model based around offering rock bottom prices and charging for every extra.
Spirit rejected JetBlue’s earlier unsolicited $3.6 billion proposal over concerns that antitrust issues would stop it from being consummated, and stuck with its agreement to be acquired by Denver-based Frontier for
$2.9 billion. Spirit and Frontier didn’t immediately respond to requests for comment.
Spirit management’s proposed deal with Frontier, which includes stock, is “high risk and low value,” JetBlue said in a statement, urging investors to reject it at a meeting scheduled for June 10.
JetBlue set up a website — www.JetBlueOffersMore.com
— and issued a letter to Spirit shareholders as part of its attempt to derail the Frontier deal, with Chief Executive Officer Robin Hayes arguing that his own proposal offers more value, more certainty and more benefits for all stakeholders.
Hayes also sought to justify the bid in a letter to his own employees, saying that “by voting against the Frontier merger, Spirit shareholders can push the Spirit board back to the table to give us the information we need and negotiate a merger agreement with us, perhaps at our original price.”
He said the combination would in turn create “a true national low-fare competitor” to big four US carriers American Airlines Group Inc, Delta Air Lines Inc, United Airlines Holdings Inc and leading discounter Southwest Airlines Co.
A Frontier-Spirit Airlines combination, though not so big, would create the largest US deep discounter just as domestic leisure travel bounces back from the Covid-19 pandemic.