Discount airline JetBlue will try to navigate its way around the usual buyout rules by launching a hostile bid to take over rival Spirit Airlines.
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Spirit rejected an earlier takeover bid by JetBlue because it favored a different merger offer from Frontier Airlines, CNN reported. In response, JetBlue will try to persuade Spirit shareholders to accept an all-cash offer of $30 per share and reject the Frontier deal.
In a lengthy letter sent to Spirit shareholders on Monday, May 16, JetBlue CEO Robin Hayes said Spirit’s board of directors “has failed to act” in their interests by refusing to engage constructively on JetBlue’s “clearly superior proposal” to acquire Spirit.
“JetBlue offers more value – a significant premium in cash – more certainty, and more benefits for all stakeholders,” Hayes wrote. “Frontier offers less value, more risk, no divestiture commitments, and no reverse break-up fee, despite more overlap on non-stop routes and their own regulatory challenges.”
JetBlue added that its $30-per-share cash deal represents a 60% premium to the value of the Frontier transaction as of May 13, 2022.
In early April, Spirit rejected a $33-a-share cash offer from JetBlue because it didn’t believe a JetBlue merger would get regulatory approval. Spirit went on to say that “given this substantial completion risk, we believe JetBlue’s economic offer is illusory.”
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The Spirit board instead decided to stay with a cash-and-stock agreement it reached with Frontier in January. At the time, that deal was valued at $25.83 for each Spirit share, but Spirit’s stock price has since declined. It now trades near $19 after pushing higher in early trading Monday on the JetBlue news.
In a statement two weeks ago, Spirit said it believes merging with…