DALLAS – JetBlue (B6) really wants to buy Spirit Airlines (NK). It wants to acquire the discount carrier so badly that it has raised the stakes even higher in the bidding war for the carrier—the nation’s largest budget airline.
The AP is reporting that Spirit has raised its offer to US$33.50 per share, US$2 more per share than its offer last week. Spirit has 108.62 million shares outstanding. You do the math.
JetBlue is trying to outbid Frontier (F9), which agreed to buy Spirit in February. NK shareholders are scheduled to vote on the Frontier offer next week. But B6’s offer is an attempt to convince them to just say no and follow the money to B6.
JetBlue says this new offer is also a “67.6% premium to the implied value of the Frontier transaction as of June 17, 2022.”
That’s a lot of money.
JetBlue also says that this latest offer contains a stronger divestiture commitment, meaning that it will sell whatever assets are deemed necessary (both Spirit’s and JetBlue’s) to obtain regulatory approval – but with a “limited carve-out” for those actions so that its Northeast Alliance will not be affected. (For a great lesson in corporate PR writing, read about this divestiture here).
JetBlue investor relations says that “JetBlue’s proposal continues to include a proactive offer to the U.S. Department of Justice of a remedy package that contemplates the divestiture of all Spirit assets located in New York and Boston so, as a result of the transaction, JetBlue will not increase its presence in the airports covered by the Northeast Alliance, as well as gates and related assets at Fort Lauderdale.”
Continuing from the previous offer, JetBlue would pay Spirit a “reverse break-up fee” of $350 million if the deal were not approved due to antitrust reasons. And JetBlue would also issue a prepayment of $1.50 per share…