89.7 F
Miami
Monday, August 8, 2022

Spirit renews support for Frontier merger after it boosts offer

A logo of low cost carrier Spirit Airlines is pictured on an Airbus plane in Colomiers near Toulouse, France, November 6, 2018. REUTERS/Regis Duvignau//File Photo

Register now for FREE unlimited access to Reuters.com

June 24 (Reuters) – Spirit Airlines Inc (SAVE.N) said on Friday it has renewed its support for a merger deal after Frontier Group Holdings (ULCC.O) raised its cash offer by $2 per share to buy its rival ultra-low cost airline, according to a regulatory filing.

On Monday, JetBlue Airways (JBLU.O) sweetened its takeover offer for Spirit to $33.50 per share – up $2 – as it sought to convince Spirit’s board to agree to its deal. At Frontier’s closing price on Friday, its offer is worth $24.29 in stock and cash.

Spirit shareholders are set to vote on the Frontier takeover proposal on June 30.

Register now for FREE unlimited access to Reuters.com

Frontier stock rose 6.6% on Friday to close $10.54, while Spirit was up 2.9% to $24.52. JetBlue shares gained 5.8% to close at $8.62.

The move is the latest salvo in a tussle to create the fifth-largest U.S. airline, helping the buyer compete with larger legacy players at a time when the industry faces labor and aircraft shortages.

Spirit’s board said on Friday that based on the improved offer from Frontier it “reiterates its unanimous recommendation that Spirit stockholders vote” in favor of the merger.

JetBlue did not immediately comment.

Frontier is boosting the per-share cash to $4.13 – up $2 – in addition to the previously announced 1.9126 shares of Frontier per Spirit share. Frontier has also agreed that $2.22 per share will be prepaid to Spirit stockholders as a cash dividend following approval of the transaction.

Frontier also has increased its reverse termination fee to $350 million to Spirit if the deal is not completed for antitrust reasons.

Spirit’s board had previously rejected the JetBlue offer, arguing that U.S. antitrust regulators would not approve a tie- up with JetBlue and noting that JetBlue refused to abandon its alliance with American Airlines (AAL.O).

Either deal would face intense regulatory scrutiny.

The Justice Department filed an antitrust lawsuit against American and JetBlue in September seeking to end the alliance, saying it would lead to higher fares in busy airports in the U.S. Northeast.

Register now for FREE unlimited access to Reuters.com

Reporting by David Shepardson in Washington and Akash Sriram in Bengaluru;
Editing by Vinay Dwivedi and Matthew Lewis

Our Standards: The Thomson Reuters Trust Principles.

Source

Related Articles

Latest Articles