Key points:
- Spirit Airlines (SAVE) stock price has risen 8.56% ahead of the crucial vote.
- SAVE shareholders will vote on Frontier’s takeover offer on Thursday.
- The airline is likely to be acquired by Frontier instead of JetBlue.
The Spirit Airlines Incorporated (NYSE: SAVE) stock price has risen 8.56% in the past week as JetBlue Airways and Frontier Airlines sweetened their takeover offers of the ultra-low-budget airline ahead of a crucial shareholder vote on Thursday, 30 June 2022.
Interestingly, SAVE stock is currently trading at around $23 despite JetBlue Airlines offering $33.50 in cash to Spirit shareholders as it works to outbid Frontier Airlines, which is currently leading as the Spirit board has recommended that shareholders vote in favour of the deal.
Also read: The Best Travel Stocks To Buy Right Now.
Frontier Airlines recently added $2 to its cash offer, raising it to $4.13 in addition to Spirit shareholders getting 1.9126 shares of Frontier for each Spirit share. However, investors seem convinced that JetBlue’s offer will be rejected on an antitrust basis.
As always, the easiest way to gauge investor sentiment is to look at an asset’s price action, and the SAVE daily stock price chart is telling us that investors are betting on JetBlue’s offer being rejected since they have refused to bid up SAVE shares to anywhere close to $30.
However, JetBlue has come out guns blazing by offering Spirit Airlines shareholders a $2.50 cash dividend if they vote against the Frontier Airlines offer on Thursday. JetBlue has also offered a much higher purchase price totalling $3.6 billion for Spirit Airlines.
Still, JetBlue has failed to renounce its partnership with American Airlines in the US Northeast, which has already attracted regulatory scrutiny on an antitrust basis. The Spirit Airlines board had asked JetBlue to drop the controversial partnership, which it has adamantly refused, making its offer to Spirit Airlines much weaker.
Therefore, Spirit shareholders are likely to vote against JetBlue’s offer since it could be dogged with regulatory scrutiny and maybe even rejected compared to Frontier’s offer, which is pretty unlikely to face any scrutiny from regulators since the two budget airlines do not have overlapping fight routes.
So, should you buy Spirit Airlines shares? I wouldn’t buy Spirit Airlines shares since I believe shareholders will vote for the Frontier offer, which is inferior to JetBlue’s on many fronts. However, I would consider buying JetBlue shares since it is currently a much stronger airline.
*This is not investment advice. Always do your due diligence before making investment decisions.
Spirit Airlines (SAVE) stock price.
The Spirit Airlines (SAVE) stock price has risen 8.56% in the past month as the bidding war heats up ahead of a crucial vote.