JetBlue Airways Corp JBLU.O on Monday 27 June ratcheted up its bidding war with Frontier Group Holdings ULCC.O for Spirit Airlines Inc SAVE.N as the race for the ultra-low-cost carrier enters the final stretch.
Both bidders see Spirit as an opportunity to expand their domestic footprints at a time when the US airline industry is dogged by labour and aircraft shortages. Either of the deals would create the fifth-largest US airline.
Under the new offer, JetBlue offered a "ticking fee," which would give Spirit shareholders a monthly prepayment of 10 cents per share between January 2023 and the closing of the deal, raising the overall value of the deal to $34.15 per share.
The New York-based carrier also increased the breakup fee to Spirit by $50 million for a total of $400 million if the deal fails to get regulatory approval. It will also prepay $2.50 per share as a cash dividend to Spirit stockholders following approval of the transaction.
The latest offer came after Frontier last Friday raised its bid for Spirit.
Frontier's revised offer persuaded shareholder advisory firm Institutional Shareholder Services (ISS) to reverse its position and recommend Spirit shareholders back a merger with the Denver-based budget carrier. Glass Lewis, another proxy firm, has also recommended the Frontier deal.
Spirit shareholders are due to vote on the merger deal with Frontier on 30 June.
Frontier chief executive Barry Biffle told Reuters on Monday the company's revised offer for Spirit will be enough to secure a merger deal with the ultra-low-cost carrier.
"We're really excited about it and getting good feedback," Biffle said.
JetBlue, however, is not ready to give up. On Monday 27 June, it again urged Spirit shareholders to vote against the Frontier deal, saying its proposal offers them "more value and certainty."
Frontier Group Sees A Deal With Spirit Airlines After Revised Offer
The above news followed news that Frontier Group Holdings ULCC.O chief executive Barry Biffle said on Monday 27 June that the company's revised offer for Spirit Airlines Inc SAVE.N will be enough to secure a merger deal with the ultra-low-cost carrier.
"We're really excited about it and getting good feedback," Biffle told Reuters in an interview.
Frontier has been vying with JetBlue Airways Corp JBLU.O to acquire Spirit. Either of the deals would create the fifth-largest US airline.
Denver-based Frontier last week bumped up the cash component of its offer for Spirit by $2 per share to $4.13 per share and agreed to prepay $2.22 per share as a cash dividend to Spirit stockholders following approval of the transaction. It also increased its reverse termination fee to Spirit by $100 million to $350 million.
TIMELINE-Twists And Turns In Takeover Battle For Spirit Airlines
All of the above news followed news that Spirit Airlines Inc <SAVE.N> on Friday 24 June urged its shareholders to back a merger deal with Frontier Group Holdings <ULCC.O> at a meeting next week after Frontier boosted its offer for its ultra-low-cost rival, hoping to stave off a bid from JetBlue Airways Corp <JBLU.O>.
Under the revised terms, Frontier will bump up the cash component of the deal by $2 per share to $4.13 per share, along with 1.9126 Frontier shares in the cash-and-stock deal.
Below are the key events of the takeover saga:
| Date | Development |
| Feb. 7 | Frontier makes a cash-and-stock offer of $25.83/share for Spirit Airlines |
| Feb. 8 | Lawyers from the US Justice Department say Spirit and Frontier's merger to create the fifth-largest airline in the country would face close scrutiny |
| March 10 | Several public advocacy groups call on US regulators to block Frontier's bid for Spirit |
| April 5 | JetBlue makes an unsolicited $3.6 billion, or $33/share, all-cash bid for Spirit |
| April 6 | JetBlue mounts a vigorous defense of its unsolicited $3.6 billion bid for Spirit, adding that it is "highly confident" of securing regulatory approval |
| April 7 | Spirit says that it would enter into discussions with JetBlue on its $3.6-billion offer as it could likely lead to a "superior proposal" to the one from Frontier |
| May 2 | Spirit rejects JetBlue's $33/share offer, saying it had a low likelihood of winning regulatory approval |
| May 10 | Head of Sun Country Airlines <SNCY.O> throws his backing behind potential merger in the ultra-low-cost airline sector |
| May 11 | Spirit says it will hold a shareholder meeting on June 10 for a vote on its proposed merger with Frontier |
| May 16 | JetBlue makes hostile all-cash takeover offer of $30/share and adds it was ready to "negotiate in good faith a consensual transaction at $33" |
| May 19 | Spirit Airlines urges shareholders to reject the hostile offer from JetBlue, saying it was "a cynical attempt to disrupt" its merger with Frontier |
| May 31 | Proxy advisory firm ISS urges Spirit shareholders to vote against a proposed merger with Frontier |
| June 2 | Frontier agrees to pay a break-up fee of $250 million in a bid to salvage its $2.9 billion acquisition of Spirit Airlines |
| June 3 | Shareholder advisory firm Glass Lewis recommends Spirit Airlines investors approve Frontier Group's $2.9 billion takeover bid, saying it was the "best available" at this time. |
| June 6 | JetBlue sweetens its takeover bid for Spirit by offering $31.50 per share in cash, comprising $30 per share at deal close and the prepayment of $1.50 per share of the reverse break-up fee. |
| June 8 | Spirit Airlines delays to June 30 a shareholder meeting to vote on its proposed merger with Frontier. |
| June 14 | Spirit Airlines said it was in talks with JetBlue Airways and has granted JetBlue access to the due diligence information being shared with Frontier Group. Spirit said it was expecting to decide on the proposal by the end of this month. |
| June 20 | JetBlue Airways said it had sweetened its takeover offer for Spirit Airlines to $33.50 per share. |
| June 24 | Frontier bumps up the cash component of the deal by $2 per share to $4.13 per share, prompting Spirit Airlines to urge its shareholders back a deal with its ultra-low-cost rival at a meeting next week. |
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