JetBlue launches hostile takeover bid for Spirit Airlines

Terminal A of LaGuardia International Airport is for JetBlue and Spirit airlines in New York.

Leslie Josephs | CNBC

JetBlue Airways put forward a hostile takeover bid of Spirit Airlines on the following Monday service provider denied JetBlue’s all-cash offering was $33 per share earlier this month.

JetBlue said the acquisition of Spirit will give it access to a large Airbus fleet, trained pilots and better ability to compete with the US “Big Four” airlines it controls. most US market. Spirit turned down an offer to stick with a $2.9 billion cash and stock deal that was planned to merge with fellow discounter Frontier Airlines. Those two airlines say the merger will allow them to grow and compete more easily.

JetBlue on Monday offered Spirit shareholders $30 a share and encouraged them to vote against the Frontier deal during its June 10 shareholder meeting. The company also said the previous offer was Their $33/share is still on the table if Spirit decides to negotiate. Shares of Spirit closed Friday at $16.98.

“If Spirit shareholders vote against the Frontier transaction and force Spirit Council to negotiate with us in good faith, we will aim for a consensus transaction at $33 per share, depending depends on getting the information to support it,” JetBlue said.

Both combinations for Spirit would create the country’s fifth largest aircraft carrier.

“We are also offering to buy their shares, currently at a slightly lower price than our initial offer because Spirit Board doesn’t follow a fair process or allow us to consider ‘undercover’ ‘ just like they’ve allowed Frontier to do,” JetBlue CEO Robin Hayes said in a note to employees Monday.

Spirit and Frontier operate a similar model with tighter seats, ultra-low fares and fees for everything else, while JetBlue operates as a full-service airline with free Wi-Fi, back TVs seats and business class on select routes.

Bill Franke, president of Frontier and a longtime budget airline investor, served as the president of Spirit. He left in 2013 and his investment firm Indigo Partners acquired Frontier.

JetBlue’s Hayes argues that previously laid out plans for Spirit and Frontier to combine are harming Spirit’s shareholders.

“The Spirit Board’s outright rejection of our offer is a worrying sign that it doesn’t care about the best interests of its shareholders. So what is the Spirit Board thinking?” Hayes said in his staff note. “Our prediction is that there are a lot of historical and personal relationships between Frontier’s controlling shareholder and some of the Spirit Board members who agreed to the Frontier deal.”

Spirit’s rejection of JetBlue’s $3.6 billion cash offer it made last month has put the New York-based airline in a difficult position. the intersection. Hayes said the acquisition of Spirit will “boost” its growth at a time when demand for new narrow-body aircraft is high and pilots are growing. supply shortage.

Spirit earlier this month said it had turned down JetBlue’s offer because it did not believe the deal would be approved by regulators. It says part of the reason is JetBlue’s partnership in the Northeast with American Airlines, which the Justice Department sued to block last year. Spirit’s CEO previously said on an earnings call in the first day of this month said he was “wondering whether blocking our deal with Frontier was in fact their goal.”

Spirit’s continued rejection of additional terms from JetBlue may have allayed regulatory concerns, including an offer to divest some of Spirit’s properties in Florida, New York and Boston. JetBlue also offered to pay $200 million in reverse breakup fees if the deal is not approved by regulators for antitrust reasons.

Transport Secretary Pete Buttigieg declined to comment on the deal Monday and said the DOT would help support any Justice Department analysis of the deal.

“The most important thing is to make sure the American people are well served by a healthy aviation sector and part of a healthy aviation sector, and part of any healthy sector of our economy. is fair competition,” he said. Squawk Box. “

Shares of Spirit were up more than 12% in late-morning trading Monday, while JetBlue was down about 4%. Frontier stock is up about 6%, while the broader market is lower. Representatives for Spirit and Frontier were not immediately available for comment.

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