WASHINGTON: JetBlue Airways said yesterday it had sweetened its takeover offer for Spirit Airlines to US$33.50 (RM147.45) per share in a bid to convince the ultra-low cost carrier to accept its offer over rival Frontier Airlines’ proposal.
The move is the latest salvo in a tussle to create the fifth-largest US airline, helping the buyer compete with larger legacy players at a time when the industry faces labour and aircraft shortages.
Spirit's board previously had rejected JetBlue’s offer, arguing that US anti-trust regulators would not approve a tie up with JetBlue and noting that JetBlue refused to abandon its alliance with American Airlines.
But Spirit said last week it was in talks with JetBlue over its offer and expected to decide on the proposal by June 30.
JetBlue’s latest offer represents a 68% premium to Frontier’s cash and stock offer, whose value stood at US$19.99 per share as of Friday. Spirit shares closed up 2% to US$21.28 on Friday.
The new proposal is US$2 a share higher than its prior offer and includes what JetBlue termed a “stronger divestiture commitment” to complete the Spirit deal but does not include abandoning JetBlue’s Northeast Alliance with American Airlines .
Spirit did not immediately comment yesterday.
JetBlue said it made the new offer “at the request of Spirit’s board and following completion of JetBlue’s diligence review and discussions with Spirit’s management team”.
Last week, Spirit granted JetBlue access to the same due diligence information shared with Frontier after failing to secure enough shareholder support for its deal with the rival suitor.
JetBlue chief executive Robin Hayes told Spirit’s board in a letter yesterday that the airline looks “forward to hearing from you soon and hope to finally move towards signing of definitive documentation for our superior transaction”.
Either deal would face intense regulatory scrutiny.
The Justice Department filed an antitrust lawsuit against American and JetBlue in September seeking to end the alliance, saying it would lead to higher fares in busy airports in the US Northeast.
Spirit rebuffed an initial US$33 a share buyout proposal from JetBlue made in April, which JetBlue later revised to US$30 and then to US$31.50.
Spirit agreed to engage with JetBlue after the larger airline increased the reverse break-up fee by US$150 million to US$350 million, payable to Spirit shareholders, in case the deal falls through due to antitrust reasons.
JetBlue has agreed to prepay US$1.50 per share of the US$33.50 promptly following Spirit shareholders approval for a tie-up.
Spirit, however, continues to be in talks with Frontier under the terms of its existing merger agreement.
Frontier shares closed up Friday 5.8% to US$9.34 a share. – Reuters