Spirit’s latest JetBlue rebuff sets up key shareholder vote

Bloomberg

Spirit Airlines Inc rebuffed a hostile $3.3 billion takeover offer from JetBlue Airways Corp, setting the stage for a potentially contentious vote by shareholders on whether to back the bid or go with a competing proposal from Frontier Group Holdings Inc.
Spirit said its board unanimously determined the JetBlue offer is not in the best interests of the carrier. The potential transaction faces serious regulatory hurdles and is unlikely to be successfully completed, Spirit said, reiterating a call for shareholders to vote in favour of Frontier’s bid.
It was the second rejection of JetBlue by Spirit’s board, which stood by Frontier’s $2.9 billion cash-and-stock deal agreed to in February. After an unsuccessful $3.6 billion cash offer, JetBlue on May 16 went hostile, offering the reduced proposal directly to Spirit shareholders in a tender offer.
Spirit shareholders will decide the issue during a June 10 special meeting. JetBlue’s refusal to exit an existing alliance with American Airlines Group Inc makes its proposed combination with Spirit a non-starter, Spirit Chief Executive Officer Ted Christie said in an interview.
“It’s inconceivable you’d think that would be something that could pass muster” with regulators.
Christie blamed the revised bid from JetBlue for failing to address the board’s underlying concerns. “It did change,” he said. “It got worse.”
JetBlue fired back at Spirit, accusing its board of refusing to negotiate in good faith. Chief Executive Officer Robin Hayes assured his own shareholders at JetBlue’s annual meeting that his company’s bid was vastly superior to Frontier’s offer.
“We firmly believe this proposed combination would be better than the alternative,” Hayes said. “We are highly confident on our ability to close the transaction.”
JetBlue also said that it would delay an investor meeting slated for this month until after the Spirit bid was settled.
Frontier applauded Spirit’s recommitment to its offer, saying in a statement that JetBlue’s bid is inferior and “can’t be completed.” With the pursuit of Spirit, JetBlue is seeking a burst of growth it can’t otherwise
attain. The rival bid by Frontier would combine similarly focused deep-discounter carriers offering bare-bones low fares while charging for extras like coffee, bottled water and printed boarding passes. Either combination would pass Alaska Air Group Inc to become the fifth-largest US airline by capacity.
Spirit’s allure stems in part from an industry wide turn towards domestic markets and leisure travellers — the bread-and-butter of ultra-low-cost airlines — as it’s recovered from a pandemic slump. Bigger carriers have moved more heavily onto that turf amid the slower return of overseas travel demand.