CHICAGO/WASHINGTON/NEW YORK, June 6 (Reuters) – JetBlue Airways Corp (JBLU.O) on Monday improved its offer for Spirit Airlines Inc (SAVE.N), heating up the bidding war for the ultra-low-cost-carrier whose shareholders are due to vote later this week on a merger agreement with Frontier Group Holdings Inc (ULCC.O).
JetBlue increased its reverse break-up fee by $150 million to $350 million, which is payable to Spirit shareholders in case the deal falls through due to antitrust reasons.
The revised offer comes days after Frontier agreed to pay Spirit a break-up fee of $250 million. read more
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Under JetBlue’s revised terms, Spirit shareholders would receive $31.50 per share in cash, comprising $30 at deal close and prepayment of $1.50 from a raised reverse break-up fee soon after Spirit shareholders vote to approve a deal.
Spirit’s shares were up 6.1% in mid-day trade.
Its shareholders are scheduled to vote on Friday on the company’s merger agreement with Frontier. However, Spirit said its board will evaluate JetBlue’s new offer and respond in due course. It asked the company’s shareholders not to take any action at this stage.
The race between JetBlue and Frontier for the Florida-based airline underscores the challenge U.S. carriers face in expanding their domestic footprint amid persistent labor and aircraft shortages. Either of the two deals will create the fifth-largest U.S. airline.
Spirit rejected JetBlue’s offer last month saying it had a low likelihood of winning approval from government regulators, prompting the New York-based carrier to launch a hostile takeover bid. read more
Savanthi Syth, airline analyst at Raymond James, said the revised offer is likely to “appease” those Spirit shareholders who have antitrust concerns about a deal with JetBlue.
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