Spirit Backs Frontier's Sweetened Merger Offer Over JetBlue's

Procurement

Ongoing bidding war for Spirit Airlines heated up again this weekend

Spirit Airlines signed an amended merger agreement with Frontier Airlines after the latter increased its bid for the carrier, Spirit announced Friday. The carrier also reiterated its stance that JetBlue's buyout proposal is not a superior offer and encouraged stockholders to vote for the Frontier merger during a special meeting scheduled to take place June 30.

Frontier is in a bidding war for Spirit with JetBlue, which had upped its offer for the low-cost carrier to $33.50 per share last week. In its latest proposal, Frontier is offering Spirit stockholders a bit more than 1.9 shares of Frontier stock for each Spirit share they hold plus $4.13 in cash, up from $2.13 per share in its initial bid in February. 

In addition, Frontier has upped its reverse termination fee to $350 million in the event the merger is not approved for antitrust reasons, matching JetBlue's reverse termination fee offer. It also agreed to prepay Spirit stockholders $2.22 per share on a record date to be determined as a cash dividend following approval of the transaction.

Spirit's rejection of JetBlue's proposal continues to hinge on the carrier's belief the deal would not gain regulatory approval—mainly because of JetBlue's Northeast Alliance with American Airlines and the pending antitrust suit against it. 

"Spirit has long taken the position that excessive consolidation in the airline industry over the last two decades has resulted in the three legacy airlines dominating domestic air travel," Spirit said in a statement. "Merging Spirit into JetBlue and its Northeast Alliance with American Airlines will exacerbate regulators' valid concerns over airline industry concentration."

Following the updated merger agreement announcement, shareholder advisory service Institutional Shareholder Services is now advising Spirit investors to vote in favor of the Frontier deal, a reversal of its previous opinion, according to The New York Times.

JetBlue will "more thoroughly review and assess" the revised merger agreement between Frontier and Spirit, and will continue its "vote no" campaign, JetBlue said in a statement. 

JetBlue Ups Ante Again to Acquire Spirit