It seems JetBlue (Nasdaq: JBLU) is seeing light to its counterbid to acquire Spirit Airlines, Inc. (NYSE: SAVE). The airlines said that after “discussions with the Spirit team last week,” it has decided to increase its bid by US$2.00 per share.
As per its last bid, JetBlue was offering to buy out Spirit for a total per share consideration of US$30 in cash and US$1.50 prepaid prior to the closing of the transaction. It has now upped the offer to US$32 per share in cash, with the US$1.50 per share prepayment still in tow.
“After discussions with the Spirit team last week and further due diligence review, we are more convinced than ever that a JetBlue-Spirit transaction would create a true national competitor to the Big Four and deliver value to all of our stakeholders,” said JetBlue CEO Robin Hayes.
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The move follows the postponement of the Spirit shareholders’ vote on the proposed merger with Frontier Airlines, Inc. (Nasdaq: ULCC) to the end of June.
| JetBlue’s previous offer | JetBlue’s newest offer | Frontier’s standing offer | |
| Per share value | US$31.50 | US$33.50 | US$25.00 |
| Reverse termination fee | US$350 million | US$350 million | US$250 million |
| Post-closing arrangement | 100% equity | 100% equity (with obligation to divest assets) | 51.5% equity |
JetBlue’s offer still includes the increased US$350 million reverse termination fee, which prompted the decision two days after to delay the shareholder vote.
Aside from the increased bid, JetBlue has also made a divestiture commitment “to litigate and to divest assets of JetBlue and Spirit up to a material adverse effect on the combined JetBlue-Spirit,” hoping to allay the regulatory concerns arising from JetBlue’s membership in the Northeast Alliance.
“[Our improved proposal offers Spirit stockholders the compelling opportunity to receive a significant premium in cash in a transaction with more value and more certainty and stronger regulatory commitments,” the company said in a letter to the Spirit board. “It is unambiguously a superior proposal.”
In February 2022, Frontier announced the definitive merger agreement with Spirit which offers 1.9126 Frontier shares and US$2.13 in cash for each Spirit share. Come April, JetBlue enters the frame with an unsolicited hostile all-cash bid resulting in a possible retirement for the Spirit brand.
Spirit shareholders are now expected to vote on the Frontier merger on June 30. Should the bid be voted down, a possible agreement may be signed with JetBlue based on its offer, which will again be subject to a separate vote by the Spirit shareholders.
JetBlue last traded at US$8.54 on the Nasdaq.
Information for this briefing was found via Edgar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
