Spirit board rejects JetBlue takeover.
Spirit Airlines on Monday rebuffed an acquisition offer from JetBlue Airways, saying it had a low likelihood of winning approval from government regulators.
In April, JetBlue made an unsolicited $3.6 billion all-cash offer to buy the no-frills airline.
The offer came less than two months after Spirit Airlines and Frontier Airlines announced they’re planning to merge to create what they call the country’s “most competitive ultra-low fare” airline.
JetBlue’s offer is significantly higher than the $22.44 per-share value of the cash and stock bid from Frontier.
However, it seems that Spirit is not interested in JetBlue’s acquisition as the proposal is unlikely to be approved by regulators, especially as JetBlue is already going through an antitrust legal battle.
The Justice Department and six states have sued to unwind JetBlue and American Airlines’ “Northeast Alliance” partnership, alleging the agreement would lead to higher fares in busy north-eastern US airports.
“We believe a combination of JetBlue and Spirit has a low probability of receiving antitrust clearance so long as JetBlue’s Northeast Alliance (NEA) with American Airlines remains in existence,” Spirit said in a letter to JetBlue Chief Executive Robin Hayes Monday.
In a statement, the chairman of Spirit’s board, Mac Gardner, said that the company stood by its plan to merge with Frontier, a deal that predates JetBlue’s offer and which Spirit argued represents the best interests of long-term shareholders.
“After a thorough review and extensive dialogue with JetBlue, the board determined that the JetBlue proposal involves an unacceptable level of closing risk that would be assumed by Spirit stockholders,” Mr. Gardner said.
“We believe that our pending merger with Frontier will start an exciting new chapter for Spirit and will deliver many benefits to Spirit shareholders, team members and guests.”
In response to the rejection, JetBlue has enhanced its offer, promising a $200 million reverse break-up fee – or $1.80 per Spirit share – if the deal does not go through for antitrust reasons.
“Spirit shareholders would be better off with the certainty of our substantial cash premium, regulatory commitments, and reverse breakup fee protection,” JetBlue’s chief executive, Robin Hayes, said in a statement on Monday.