Deal: JetBlue Launches Hostile Takeover Bid For Rival Spirit Airlines

The latest hostile takeover bid on the block is from the airline sector. JetBlue Airways (NASDAQ: JBLU), the American budget airline, is making a confrontational play to acquire a competitor, Spirit Airlines (NYSE: SAVE).

Spirit has already entered into a definitive agreement to merge with rival Frontier Airlines (NASDAQ: ULCC), but JetBlue is urging the company’s shareholders to abandon that deal and go with its instead.

  • Frontier’s merger deal values Spirit Airlines at $2.9bn. JetBlue is offering $30 in cash per share in its counter bid, valuing Spirit Airlines at $3.2bn.

 

  • Earlier this month, JetBlue offered $33 per share for Spirit, which rejected the deal for fears of antitrust pushback, despite JetBlue offering a $200mn breakup fee if regulators blocked it. The latest offer indicates that JetBlue wants to acquire its rival at all odds.

In a statement, JetBlue urged Spirit’s shareholders to vote against its proposed merger with Frontier Airlines at an upcoming meeting. The company said it was ready to raise its offer back to $33 per share if need be.

JetBlue threw shade at Bill Franke, Frontier Airlines’ Chairman and the architect behind its proposed merger with Spirit Airlines. Indigo Partners, Franke’s investment firm, is the controlling shareholder of Frontier Airlines and a significant shareholder in Spirit Airlines. Franke was also the Chairman of Spirit Airlines from 2006 to 2013.

Several members of Spirit’s board have ties to Franke, such as its current Chairman, Mac Gardner, who was a board member for three years during Franke’s previous tenure as Chairman. Gardner led the merger discussions with Frontier’s team, led by Franke.

At that, JetBlue accused Spirit’s board of acting in their self-interest rather than that of shareholders. The airline claimed that Spirit’s board “consistently refused to engage constructively with us” following its initial takeover bid.

  • “Ask yourself a simple question: why won’t the Spirit Board engage with us constructively?” JetBlue’s board wrote in a letter to Spirit’s shareholders. “The interests of Bill Franke’s Indigo Partners and the long-standing relationships between the two companies is the obvious answer.”

The ball is in the court of Spirit’s shareholders, who’ll vote on the proposed takeover at a special meeting scheduled for the 10th of June, 2022.

Spirit Airlines’ stock (NYSE: SAVE) jumped 14% on Monday following JetBlue’s hostile takeover notice. The company has a current market capitalization of $2.1bn.

 

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