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.
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.
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