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JetBlue Airways has launched a $3.2 billion hostile takeover bid for Spirit Airlines and asked the discount carrier’s shareholders to vote down a merger agreement with Frontier Airlines.
On Monday, JetBlue announced a tender offer to acquire Spirit for $30 per share, adding its previous $33 per share proposal was still on the table, subject to negotiations.
JetBlue also started a campaign to derail Spirit’s combination with Frontier, a cash-and-stock deal valued at $2.9 billion when it was unveiled in early February. Since then, a 30% drop in Frontier’s share price has significantly reduced the transaction’s value.
In an effort to convince Spirit shareholders to reject the Frontier merger at a special meeting on June 10, JetBlue pointed out that its $30 per share tender was 60% above the Spirit-Frontier deal as of May 13.
Spirit shares surged 13% Monday after JetBlue’s tender offer announcement and they were up another 1% at $19.50 each as of 11 a.m. EDT Tuesday. That gives Spirit a market value of $2.1 billion.
JetBlue’s move comes after seeing its $33 per share, or $3.6 billion, bid rejected by Spirit, which called it “illusory.” Spirit cited antitrust concerns, saying regulators are unlikely to approve an offer from JetBlue largely because of its partnership with American Airlines in the Northeast, which is already facing heavy scrutiny from the U.S. Justice Department.
But JetBlue believes these concerns have been overblown and argued that the Frontier deal faces similar regulatory risk. JetBlue also slammed Spirit for refusing to share financial information.
“The Spirit board failed to provide us the necessary diligence information it had provided Frontier and then summarily rejected our proposal, which addressed its regulatory concerns, without asking us even a single question about it,” JetBlue CEO Robin Hayes wrote in a letter Tuesday. “The Spirit board based its rejection on unsupportable claims that are easily refuted.”
JetBlue said it was willing to shed certain assets to alleviate antitrust concerns and agree on a $200 million reverse break-up fee.