Key points:
- JetBlue moves in on all-cash acquisition of JetBlue, locked in takeover battle with Frontier Holdings
- JetBlue offered 30$ a share, stating a negotiation of $33 is on the cards
- The acquisition comes as a bid to compete against the US ‘big four’ airlines
Following talks last month, JetBlue has reiterated its once-declined offer for an all-cash takeover of Spirit Airlines (NYSE: SAVE). The intended acquisition acts as a bid to compete with the ‘Big Four’ airlines that currently dominate nearly 80% of the US passenger market. JetBlue is now locked in a takeover battle with Frontier Group Holdings, also issuing a ‘Vote No’ proxy statement that hopes to urge Spirit stakeholders to deny the proposed deal with Frontier.
In the official letter, JetBlue offered 30$ a share but followed with a statement saying the company is ready to “negotiate in good faith a consensual transaction at $33, subject to receiving necessary diligence”. Spirit previously rejected the $33 bid, stating the offer had a low likelihood of winning approval from regulators. SAVE shares are currently trading at a premarket gain of 16% in response to the hostile bid. Spirit investors will have to wait until June 10th for news regarding the proposed deal with Frontier.
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Interest in Spirit was registered back at the beginning of April, when company CEO Robin Hayes pitched his vision of a dual budget airline to Spirit CEO Edward Christie, citing a new ‘leading player’ best positioned to serve customers by offering improved flight schedules and even more competitive fares.
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JetBlue, which is already the sixth largest US passenger carrier, would operate Spirit under the existing JetBlue tag, while also promising a $200M reverse break-up fee should the deal not go through due to antitrust reasons – Spirit are apparently looking for a substantially higher reverse break-up fee.
The company is yet to respond regarding today’s bid, but it will be interesting to see if mounting pressure has any effect on management’s plans for the takeover.