Spirit calls on shareholders to reject JetBlue offer

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Spirit Airlines’ board of directors has recommended that its shareholders reject a $30 per share offer from JetBlue Airways, arguing that the takeover offer “has not addressed the core issue of significant completion risk and insufficient protection for Spirit’s shareholders.”

“Based on our own research and the advice of antitrust and economic experts, we believe that the proposed combination of JetBlue and Spirit has no realistic chance of gaining regulatory approval as our business faces a long and bleak time is pending a resolution,” Spirit Airlines CEO Mac Gardner said in a statement. “In that scenario, a reverse break-up fee of $1.83 per share will not come close to adequately compensating Spirit shareholders for the significant business disruptions that Spirit will experience during what JetBlue recognizes is a prolonged period. regulatory process will be.”

ticker	Security	Last	Change	Change %
SAVE	SPIRIT AIRLINES INC.	19.09	-0.33	-1.70%
JBLAU	JETBLUE AIRWAYS CORP.	10.25	+0.33	+3.33%

The recommendation comes after Spirit already rejected JetBlue’s original proposal to acquire the company for $33 a share.

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Spirit said a possible combination with JetBlue would result in a “higher/higher carrier that would eliminate a cheaper/lower carrier and remove about half of the ULCC capacity in the United States”.

A JetBlue plane lands past a Spirit Airlines jet on taxiway at Fort Lauderdale Hollywood International Airport on Monday, April 25, 2022. (Joe Cavaretta/Sun Sentinel/Tribune News Service via Getty Images) (Joe Cavaretta/Sun Sentinel/Tribune News Service via Getty Images/Getty Images)

It also cited concerns about JetBlue’s “Northeast Alliance” with American Airlines. The Justice Department is currently filing a lawsuit to block the deal, alleging the NEA is anti-competitive.

In addition, Spirit warned its shareholders would “be exposed to significant risk from fluctuating market conditions and stock market volatility” under JetBlue’s offer and that the company’s debt financing for a potential Spirit acquisition “remains questionable.”

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Spirit argues that JetBlue’s earlier proposal and offer are “a cynical attempt” to disrupt the $2.9 billion merger with Frontier, which JetBlue considers a “competitive threat.”

A Frontier Airlines plane taxis past a Spirit Airlines plane at Indianapolis International Airport in Indianapolis, Indiana, US, on Monday, February 7, 2022. Photographer: Luke Sharrett/Bloomberg via Getty Images (Photographer: Luke Sharrett/Bloomberg via Getty Images/Getty Images)

Frontier and Spirit expected their combined company to deliver $1 billion in consumer benefit and synergies from flying more on existing assets and generate annual revenues of approximately $5.3 billion and annual run-rate operating synergies of $500 million once the merger is complete.

The combined airline would add new routes and offer more than 1,000 daily flights to more than 145 destinations in 19 countries through complementary networks, Spirit said.

ticker	Security	Last	Change	Change %
ULCC	BORDER GROUP HOLDINGS	9.48	+0.04	+0.42%

“It’s no surprise that Spirit shareholders are getting more of the same from the Spirit Board,” JetBlue said in response to the Spirit Board’s recommendation. “The Spirit Board, driven by serious conflicts of interest, continues to ignore the interests of its shareholders by distorting the facts to distract from their flawed process and protect their inferior deal with Frontier.”

JetBlue said Frontier’s deal “offers less value, more risk and no regulatory obligations, despite a similar regulatory profile.”

“We are confident that if we continue to share the facts directly with Spirit shareholders, they will be even more confused than they already are as to why the conflicting Spirit Board has refused to negotiate with us in good faith. the company added. “We believe Spirit’s shareholders will make their views known by voting against the Frontier offer and tendering their shares in our offer.”

Spirit shareholders will vote on the Frontier merger at the company’s June 10 shareholder meeting.

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