Frontier ups bid for Spirit in response to JetBlue pressure

Jun 24, 2022

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Frontier Airlines increased its offer for Spirit Airlines on Friday, less than a week before Spirit shareholders vote on whether to approve the proposed merger between low-cost carriers.

The new agreement, which was detailed in an SEC filing late Friday, would see Spirit shareholders get a total of $4.13 in cash per share if the merger is completed, an increase of $2 from the previous offer. Spirit shareholders would additionally still receive shares of Frontier as part of the payment. Spirit said that $2.22 per share of the total cash amount would be paid before the merger closes as a dividend.

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JetBlue’s all-cash offer would give Spirit shareholders $33.50 per share, but no stock in the combined airline, a deal valued at about $3.6 billion. Frontier’s original offer was valued at $2.9 billion, but has lost some value because of a decline in stock prices.

Frontier also increased its proposed early termination fee to $350 million, in the event that the Department of Justice rejects the merger on antitrust grounds — an increase of $100 million over the previous offer.

The new offer comes after Spirit showed signs of growing openness to JetBlue’s unsolicited offer. Spirit postponed its shareholders vote from earlier this month to June 30 in order to give the board more time to consider JetBlue’s offer, while the budget carrier also provided due diligence to the JetBlue team.

Spirit’s board has suggested shareholders adopt the Frontier agreement, arguing that there’s a greater likelihood that regulators would reject a merger with JetBlue.

“A merger with Frontier poses less regulatory risk on Spirit stockholders and increases competition in the industry for the benefit of consumers,” Spirit board chairman Mac Gardner said in a statement. “The Board is confident a merger with Frontier is the most financially and strategically compelling path forward for Spirit stockholders, with more certainty and the strongest likelihood of closing.”

Featured photo by Joe Raedle/Getty Images.

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