Just weeks after Spirit Airlines’ (NYSE: SAVE) board rebuffed JetBlue’s (NASDAQ: JBLU) second offer for a merger, the New York-based airline mounted the third attempt to take over the low-cost carrier. This time, JetBlue has gone hostile and is appealing to Spirit’s shareholders in a tender offer to reject the pending Frontier deal and vote instead on JetBlue’s direct offer.
In a statement Monday, JetBlue said it was offering an “all-cash, fully financed tender offer to acquire all of the outstanding shares of Spirit for $30 per share.” Things escalated after JetBlue said Spirit’s board of directors displayed an “unwillingness” to disclose JetBlue’s original offer to shareholders fully. JetBlue charged Spirit’s Board with showing favor to Frontier Airlines (NASDAQ: ULCC), which initially offered to acquire Spirit in February.
“Given the Spirit Board’s unjustified refusal to engage, we have decided to bring our proposal directly to the Spirit shareholders. We urge you to vote ‘AGAINST’ the Frontier transaction at Spirit’s upcoming special meeting. This will send a message to the Spirit Board that you want it to negotiate with us in good faith,” JetBlue said to Spirit shareholders.
For its part, Spirit has described JetBlue’s offer as both “unsolicited” and then “illusory,” ultimately striking it down by saying it was unlikely that regulators would approve the merger for fear of increasing antitrust scrutiny. It preferred the Frontier deal, which would offer $25.83 per Spirit share.
However, JetBlue maintains that this offer would be a 60 percent premium to the value of the Frontier offer and said it would be willing to go up to $33 per share if Spirit’s board provides the information JetBlue needs to vet the deal thoroughly.
JetBlue has created a website to campaign to Spirit shareholders to go along with the letter it has sent to them arguing its case.
“JetBlue offers more value—a significant premium in cash—more certainty, and more benefits for all stakeholders. Frontier offers less value, more risk, no divestiture commitments, and no reverse break-up fee, despite more overlap on non-stop routes and their regulatory challenges,” the website says.
Since JetBlue entered the conversation, Frontier has been radio-silent. All eyes are on June 10, when Spirit shareholders are scheduled to vote on the initial $2.9 billion Frontier buyout offer. Upfront, Spirit shareholders would reap more from the JetBlue deal. Still, Frontier’s deal structure promises Spirit shareholders 48 percent of the combined airline, and that could win out in the long run if that new company’s share price increased.