Spirit Delays Again Shareholder Vote For Frontier Merger To Continue Talks With JetBlue

The fight for flights is not yet over in the tumultuous bid to acquire Spirit Airlines, Inc. (NYSE: SAVE). The Florida-based airline postponed again the shareholder vote on its proposed merger with Frontier Airlines, Inc. (Nasdaq: ULCC) mere hours before the scheduled meeting.

Spirit announced on Wednesday night that it plans to just open and quickly adjourn the scheduled stockholders’ meeting without conducting the vote to “allow the Spirit Board of Directors to continue discussions with Frontier and JetBlue Airways Corporation (Nasdaq: JBLU).”

“There will be no voting or other matters conducted at the meeting on June 30, 2022, and the Company intends to reconvene the Special Meeting on July 8, 2022 at 11:00am ET,” the company said.

JetBlue immediately complimented the Spirit board for the move, saying it looks “forward to commencing a constructive and substantive dialogue with them.”

“It’s clear that Spirit shareholders have now handed the Spirit Board an undeniable mandate to reach an agreement with JetBlue,” said CEO Robin Hayes in a statement.

The vote on the Spirit-Frontier merger was originally scheduled on June 10 before it was delayed to June 30 after JetBlue’s hostile offer had been gaining ground.

“Spirit would not have postponed tomorrow’s meeting if they felt they had the votes,” said Henry Harteveldt, a travel industry consultant and president of Atmosphere Research Group.

During the adjournment, Spirit said it will continue to solicit proxy votes.

As it stands, Frontier’s latest bid offers to buy Spirit at US$4.13 cash and 1.9126 Frontier shares per Spirit share held. This also includes raising the reverse termination fee to US$350 million and adding a prepayment rider of US$2.22 per share.

Not to be outbid, JetBlue also sweetened its offer, with the latest being US$33.50 cash per Spirit share held. It increased its reverse termination fee to US$400 million and upped its prepayment to US$2.50 per share. The airlines also added a ticking fee mechanism, set to pay Spirit shareholders US$0.10 per share monthly until the proposed merger closes.

While Frontier offers less upfront cash consideration, the company is banking on Spirit shareholders realizing the proforma value of the merger “in excess of US$50 per share” compared to JetBlue’s “hard cap on value at US$33.50 per share.”

The Colorado-based airlines, as well as Spirit, has called into question the viability of JetBlue’s proposed acquisition passing through antitrust regulators–given the latter’s Northeast Alliance with American Airlines.

“A Spirit acquisition by JetBlue would lead to an antitrust dead end—a fact that no amount of JetBlue money, bluster or misdirection will change,” Frontier said.

To this front, JetBlue committed to an “obligation to litigate and to divest assets of JetBlue and Spirit up to a material adverse effect on the combined JetBlue-Spirit.”

Spirit last traded at US$22.41 on the NYSE while JetBlue last traded at US$8.96 and Frontier last traded at US$9.51 both on Nasdaq.

Information for this briefing was found via CNBC 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.

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