Spirit Airlines Urges Stockholders to Reject JetBlue Tender Offer

In a statement, Mac Gardner, chairman of the board of directors for Spirit Airlines, said Spirit wants to march on with the Frontier deal.

"Our pending merger with Frontier is advancing as planned. We continue to recommend that Spirit stockholders vote FOR the merger with Frontier on June 10, as we believe the combination of these two [ultra-low-cost carriers (ULCCs)] is the best way to deliver maximum value to Spirit stockholders."

On Monday, JetBlue urged Spirit's shareholders to vote against the pending merging between Spirit and Frontier Airlines (NASDAQ: ULCC) and instead accept an "all-cash, fully financed $30 per share offer to acquire all of the outstanding shares." However, Spirit countered by saying that the deal was not in the shareholder's best interest of Spirit, based on its conversations with its outside financial and legal advisors.

From its statement, JetBlue said its offer would be a 60 percent premium to the value of Frontier's, with a willingness to go up to $33 per share. Still, Spirit contends that closing the deal with JetBlue would invite "substantial regulatory hurdles."

"JetBlue's tender offer has not addressed the core issue of the significant completion risk and insufficient protections for Spirit stockholders," Gardner said in the same statement.

Particularly, JetBlue's and American Airlines’ Northeast Alliance (NEA) tie-up faces an antitrust lawsuit from the Department of Justice for being anti-competitive. Spirit agrees with the lawsuit, which is scheduled to go to court in September 2022. 

With this in mind, Spirit said the deal with JetBlue would not be "reasonably capable of being consummated and is not superior to Spirit's agreed merger transaction with Frontier." Instead, the Spirit board wants stockholders to focus on the Frontier deal and has unanimously recommended that they vote for that one. 

"Based on our 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," Gardner explained, calling the ordeal a "long and bleak limbo period."

Moreover, Gardner wants to ensure that Spirit shareholders are reimbursed fully for having to entertain JetBlue's offer. He said JetBlue's $1.83 per share break-up fee would "not adequately compensate Spirit's shareholders for the significant business disruption" that Spirit would face as JetBlue maintains its pursuit.