In February, Frontier Airlines announced plans to acquire Spirit Airlines for $2.9 billion. JetBlue Airways revealed its rival a $3.6 billion all-cash offer in early April, sparked a Spirit war between the two carriers that has continued ever since. Both airlines have the potential to become the fifth largest airline complex in the United States. Even so, it looks like the fight is finally over with Frontier and Spirit reaching acceptable terms.
The biggest barrier to Frontier’s acquisition of Spirit Airlines is not any offer made by JetBlue, but Spirit’s shareholders. In early June, Institutional Shareholder Services, an authorized advisory firm, urged shareholders not to vote on the Frontier deal. The spirit after that delay the vote on the acquisition until June 30. The Florida-based airline’s management announced that it delayed the vote because of a lack of shareholder support but continued to seek a better deal with Frontier as the first choice.
Today, the Shareholder Services Organization reversed its stance and proposed a vote on a new deal with Frontier Airlines. The ISS states, “Stakeholders are best served by implementing an agreement that offers the best combination of long-term value and compensation in the event of a regulatory disapproval. Regarding the balance, support for the merger with Frontier under the revised terms is guaranteed. Frontier increased its buy bid by $2 per share ($4.13 per share), matching the increase from JetBlue. Frontier also increased the termination fee against Spirit by up $350 million, an increase of $100 million.
JetBlue currently $3.7 bThe illion offer sounds tempting, but the New York-based airline has done little to ease Spirit’s worries that government regulators won’t actually approve the deal. JetBlue is currently under investigation for antitrust behavior because of its strategic alliance with American Airlines. When asked by Spirit to end the controversial partnership for further negotiations, JetBlue refused. This rejected need partly shows that JetBlue simply wanted to disrupt the creation of a direct competitor in the industry.
