JetBlue appears determined to acquire Spirit, with a new and improved offer just days ahead of a Spirit Airlines shareholder vote on whether Spirit should merge with Frontier or JetBlue.
Third Time Is A Charm? JetBlue Ups Offer For Spirit Airlines With New Shareholder Prepayment And Higher Reverse Break-Up Fee
The new offer was sent to the Spirit Airlines Board of Directors this morning and includes:
- Enhanced reverse break-up fee: JetBlue would provide a $350 million ($3.20 per Spirit share) reverse break-up fee, payable to Spirit in the unlikely event the transaction is not consummated for antitrust reasons.
- Accelerated prepayment of $1.50 per share: JetBlue would prepay $1.50 per share in cash (approximately $164 million) of the reverse break-up fee, structured as a cash dividend to Spirit stockholders promptly following the Spirit stockholder vote approving the combination between Spirit and JetBlue.
- All-cash premium: JetBlue’s proposal offers Spirit stockholders aggregate consideration of $31.50 per share in cash, comprised of $30 per share in cash at the closing of the transaction and the prepayment of $1.50 per share of the reverse break-up fee.
JetBlue insists that a Spirit – JetBlue merger would be good for competition, creating a viable national competitor to American, Delta, and United. JetBlue CEO Robin Hayes argued:
“Combining JetBlue and Spirit would create a true national competitor to the dominant legacy carriers, delivering low fares and a great experience for more customers, more opportunities and good paying jobs for crew members, and more value for stockholders.
The key features of our Improved Proposal – the up-front cash payment and increased reverse break-up fee – reflect the seriousness of our commitment and underscore our confidence in completing this transaction. Additionally, given the similar regulatory risks of the two transactions and the increased reverse break-up fee we are prepared to provide, we believe our Improved Proposal remains a Superior Proposal by any measure.”
(you can view his full letter here)
The same anti-trust concerns are likely to persist, however. The Spirit Board will consider this proposal ahead of the shareholder meeting.
JetBlue appears desperate to absorb Spirit Airlines in order to be able to grow. The latest offer provides an even more generous offer than Frontier and seeks to incentivize stockholders with a $1.50 “advance” to Spirit Airlines stockholders and increase the reverse break-up fee to a degree in which JetBlue hopes Spirit might say, “What have we got to lose?”
My hunch is Spirit Airlines will turn down this offer for the same reason the earlier offers have been turned down, but how the stockholders will vote is a whole different matter.
A jetblue aquisition will be terrible for consumers. Jetblue will significantly decrease capacity upon a successful integration.
Jetblue’s a320’s have 24 seats fewer. If that plane has 4 flights a day, that’s about 100 seats less per day. Roughyl 30,000 seats per day on conservative estimates of a meger
JetBlue is a joke! Never will fly them!
How is JetBlue a joke? Planes are really nice, lots of legroom and decent snacks. I do not understand the hate for B6. Rough patches..yes but all airlines go through them. Spirit / American / United even Delta went through way worse. Here are some facts
1. Jetblue does not oversell flights (rare scenarios see 1 – 3 but its usually during IRROPS)
2. B6 MINT destroys DL/AA/UA (sorry…opinion)
3. B6 standard economy seat is way more spacious then anyone out there
4. Even More Space product is actually extremely spacious, more then UA/AA/DL extra legroom.
5. Wifi is fast and free
6. B6 ops over the last 2 months have improved incredibly. While DL cancelled 1400 flights memorial day weekend, JetBlue ops were mostly normal
Not sure what all the hate is… the bad experiences happen everywhere and I wish all the airlines could get their act together but JetBlues product is top of the line in economy.
I will tell you how Spirit / Frontier will end up a joke:
*the public is mostly unaware how Spirit/Frontier pilots are by far the poorest paid A320 pilots in American of major airlines. Indigo partners has NO PLANS on pilot raises for FIVE years. This to me means part of these merger synergies are based on that. Pilots will leave NK/F9 as fast as they can and recruiting may become tough. That will lead to a future of cancellations and IRROPS like you have not seen. The labor relations through any merger will be a challenge but at lease in the JetBlue merger , all Spirit pilots will get a nice increase!
I can also tell you , Spirit and Frontier are the last major US airlines using non-AQP pilot training. It is old school and cheap. Not saying it bad but its not NEARLY as good as what Jetblue does for new company pilots and recurrent training. It just goes to show how cheap this new NK/FP airline combined will be. But YES.. you can save a few bucks and sit in that awful seat.
@SMR JetBlue Mint comfort is a joke. Flew from BOS to SAN. Looked beautiful, good food, stylish, but felt like sitting on cement for over 5 hours. Rather have comfort plus on delta.
CNBC’s Jim Cramer feels this will drag out for 2 years and then be rejected for anti trust reasons. He’s not always right but he usually is well informed in his opinions.
Obviously JetBlue doesn’t think it’s an issue. Time will tell.