Although the Florida carrier remains committed to merging with Frontier Airlines after another revision to their proposal, JetBlue is also offering more money with the hopes of dissuading shareholders from voting for the deal on Thursday, June 30, 2022.
Revised Proposals Add Cash, Increase Reverse Breakup Fees
After multiple bids from JetBlue, the latest amended merger agreement between the two low-cost-carriers now includes a $350 million reverse termination fee for Spirit, along with a per-share cash consideration of $4.13 in cash and 1.9126 shares of Frontier stock. Of that, $2.22 per share will be paid to Spirit shareholders as a dividend once the proposal is voted upon favorably. As a result of the increased cash, Spirit will yield one additional board selection to Frontier for the combined company.
Not to be outdone, JetBlue’s latest offer now includes an accelerated prepayment of $2.50 per share, structured as a cash dividend to Spirit shareholders if their proposal is approved. The airline is also offering a $400 million reverse termination fee, and a ticketing fee mechanism for all Spirit shareholders from the moment their deal is approved until consummation or termination.
“It’s a great opportunity for JetBlue and Spirit to merge, to create a truly national, low fare challenger brand to the legacy airlines,” JetBlue chief executive Robin Hayes told FlyerTalk during the 2022 IATA Annual General Meeting. “Taking the best of JetBlue and the best of Spirit and creating an airline that can compete on a more national level.”
Although TIG Advisors – which currently holds around 2 million shares of Spirit – say they intend to vote against the Frontier merger to support the JetBlue bid, leaders at the Miramar-based company are still throwing support behind their agreement with Frontier, announced in February 2022. In a press release including clips from major business news outlets throwing doubt on the JetBlue deal, Spirit CEO Ted Christie tells shareholders the deal could not pass regulatory review due to the Northeast Alliance with American Airlines, and the deal is still “substantially below the potential $50 per share or more that could result from a merger with Frontier.”
“The latest offer from JetBlue does nothing to address our Board’s serious concerns that a combination with them would not receive regulatory approval,” Christie said in a press release. “That unsolved issue, combined with the fact that their offer is still substantially below the potential $50 per share or more of value that we expect will result from a merger with Frontier, affirms our analysis that our merger agreement with Frontier provides more value and certainty to our stockholders.”
In an interview with FlyerTalk, Hayes said the Northeast Alliance would rather give both airlines a boost to compete with the legacy carriers. If his proposal were successful, the CEO said Spirit aircraft would go through a retrofit process to be converted to the JetBlue cabin.
“The Northeast Alliance and the Spirit transaction, they are complimentary,” Hayes told FlyerTalk. “The Northeast is about making JetBlue bigger and more competitive in the northeast, allows us to compete with the really big airlines like Delta and United, and Spirit is allowing us to get bigger nationally.”
Spirit will call a special shareholder meeting on Thursday, June 30, 2022, to consider one question: Whether or not the airline should merge with Frontier. Because the board is not currently entertaining the question of merging with JetBlue, a vote against the Frontier proposal does not directly equate to a vote for merging with JetBlue.
Source: frugal travel guy