JetBlue Launches Hostile Takeover Bid for Spirit Airlines

JetBlue began what amounts to a hostile takeover bid of Spirit Airlines on Monday when it sent a revised acquisition proposal and filed a proxy statement with the U.S. Securities and Exchange Commission that urges Spirit shareholders to vote against Frontier Airlines' merger offer at a June 10 special meeting.

The tactics come about two weeks after Spirit rejected JetBlue's initial all-cash offer of $33 per share, valued at $3.6 billion, in favor of the deal with Frontier, which was valued at $2.6 billion. Spirit cited concerns the JetBlue deal would not be approved by regulators, highlighting the pending antitrust suit against JetBlue's "Northeast Alliance" with American Airlines.

Under its new takeover proposal, JetBlue has lowered its offer to $30 per share, "given the Spirit board failed to provide us the necessary diligence information it has provided Frontier," wrote JetBlue CEO Robin Hayes in a letter to Spirit shareholders. Should the shareholders vote to reject the Frontier offer, JetBlue "will work towards a consensual transaction at $33 per share, subject to receiving the information to support it."

The revised bid still includes a reverse break-up fee of $200 million should the deal not be approved, but JetBlue remains unwilling to divest its Northeast Alliance. Instead, it would offer to the U.S. Department of Justice a "remedy package that contemplates the divestiture of all Spirit assets located in New York and Boston so, as a result of the transaction, we do not increase our presence in the airports covered by our Northeast Alliance, as well as gates and related assets at other airports, including Fort Lauderdale."

JetBlue maintains that a JetBlue-Spirit combination "will create a more compelling and viable competitor to the Big Four airlines that control more than 80 percent of the U.S. market," and is "confident" it will obtain regulatory approval as "Spirit's suggestion that our Northeast Alliance is a regulatory obstacle has no basis in fact or in law."

Spirit did not immediately response to a request for comment.

 Spirit Board Rejects JetBlue Acquisition Proposal, Sticks with Frontier