Tuesday, February 21, 2012

Spirit to Start Talks With JetBlue Over $3.6 Billion Deal

JetBlue’s offer could scuttle Spirit’s earlier deal with Frontier Group Holdings




The Wall Street Journal 
By Alison Sider
Aprril 8, 2022 9:40 am ET


Spirit Airlines Inc. said it would entertain JetBlue Airways Corp.’s unsolicited $3.6 billion bid to buy the airline and start talks with its new suitor.

Spirit had already struck a $2.9 billion merger agreement with Frontier Group Holdings Inc., another budget airline, when JetBlue swooped in with a competing offer. Spirit said its board has determined that JetBlue’s offer “could reasonably be likely to lead to a ‘superior proposal’”—something that allows it to enter into talks with JetBlue under the terms of its merger agreement.

“We are pleased the Spirit Board recognizes the compelling value for all stakeholders that JetBlue has offered,” JetBlue Chief Executive Robin Hayes said in a statement Thursday night.

Spirit said its board hasn’t determined that JetBlue’s offer is actually better than Frontier’s, and said there’s no assurance that the discussions with JetBlue will lead to a deal. The merger agreement with Frontier remains in place, and Spirit’s board continues to recommend it, Spirit said.

A Frontier spokesperson didn’t immediately respond to a request for comment late Thursday.

Analysts and industry observers were taken aback by JetBlue’s approach, which came about two months after Spirit and Frontier had announced a deal they had been working on since last year. JetBlue’s shares have fallen 17.6% since Monday, the day before the offer was announced. Spirit’s shares have gained about 20% in that time.

JetBlue and Spirit have very different business models. While Spirit and Frontier are known for offering rock-bottom fares and layering on fees, JetBlue has touted a more high-end product.

Still, Mr. Hayes said this week that buying Spirit would turbocharge his airline’s growth, allowing it to enter new cities and take on the four major rivals that dominate the market. It would provide JetBlue with an influx of planes and pilots at a time when both are in short supply. JetBlue has said it would integrate Spirit’s planes and workforce, retrofitting its fleet to match JetBlue’s aircraft.

Frontier has said it believes such a deal would lead to higher prices for travelers, and questioned whether regulators would sign off while the Justice Department is also challenging a partnership between JetBlue and American Airlines Group Inc. JetBlue executives have said they are highly confident the deal will gain regulatory approval.

1 comment:

  1. The new great American dream: start a business, grow it and make it look attractive, then sell it to the highest bidder. That's the Spirit.

    ReplyDelete