by Donald Wood
Last updated: 9:57 AM ET, Thu May 19, 2022
Spirit Airlines announced its Board of Directors has unanimously determined the unsolicited tender offer from JetBlue is not in the best interest of the carrier and its stockholders.
Spirit officials consulted outside financial and legal advisors, who revealed the JetBlue proposal would face substantial regulatory hurdles, just as the carrier's Northeast Alliance deal with American Airlines is under investigation by the Department of Justice.
Other issues the Spirit board found during research into the JetBlue offer include stockholders being forced to wait as long as two years for antitrust approval, a dependence on a highly volatile stock market and questionable debt financing.
"JetBlue's tender offer has not addressed the core issue of the significant completion risk and insufficient protections for Spirit stockholders," Spirit Chairman Mac Gardner said. "Based on our own research and the advice of antitrust and economic experts, our view is that the proposed combination of JetBlue and Spirit lacks any realistic likelihood of obtaining regulatory approval, while our company faces a long and bleak limbo period as we await resolution."
As a result, Spirit board members recommend that stockholders vote for the merger agreement with Frontier Airlines. The Association of Flight Attendants-CWA union said it would back the planned merger between the carriers announced in February.
Spirit shareholders are scheduled to vote on June 10 on the bid by Frontier.
"Our pending merger with Frontier is advancing as planned, and we continue to recommend that Spirit stockholders vote for the merger with Frontier on June 10," Gardner continued. "We believe the combination of these two ULCCs is the best way to deliver maximum value to Spirit stockholders."
Earlier this week, JetBlue announced it would file a "Vote No" proxy statement urging Spirit shareholders to vote against the $2.9 billion acquisition offer by Frontier. Officials from Spirit previously rejected JetBlue's $3.6 billion offer twice.
Spirit officials rebuffed the comments from JetBlue, saying the board is acting in the best interest of stockholders and JetBlue is looking to disrupt Frontier's attempt to become the fifth-largest carrier in the United States.
TravelPulse's aviation expert Rich Tomaselli broke down how market share is likely the biggest reason behind JetBlue's offer to Spirit.
In response to the recommendation from Spirit's board, JetBlue issued the following statement:
"It's no surprise that Spirit shareholders are getting more of the same from the Spirit Board. The Spirit Board, driven by serious conflicts of interest, continues to ignore the best interests of its shareholders by distorting the facts to distract from their flawed process and protect their inferior deal with Frontier."
"Regarding regulatory approval, Spirit would have you ignore the current regulatory climate to think that approval of their Frontier deal is assured. That is simply not true. Both deals are subject to regulatory review, and both deals have a similar risk profile. Spirit shareholders recognize that and are showing great interest in hearing more about our superior offer and the regulatory commitments and protections we have made, including a reverse break-up fee."
"Frontier offers less value, more risk, and no regulatory commitments, despite a similar regulatory profile. We are confident that as we continue to share the facts directly with Spirit shareholders, they will be even more perplexed than they already are about why the conflicted Spirit Board has refused to negotiate with us in good faith. We believe that the Spirit shareholders will make their views known by voting against the Frontier offer and tendering their shares into our offer."
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