Spirit Airlines prefers a merger with Frontier Airlines instead of JetBlue

on Jul 2, 2022
  • Spirit Airlines signs a second amendment to a previously announced merger deal with Frontier Airlines
  • Spirit turned down JetBlue's offer that wasn't a Superior Proposal
  • The reverse termination fee increased to $350

Spirit Airlines Inc. (NYSE: SAVE) has signed a second amendment to its previously disclosed merger deal with Frontier Airlines Inc’s parent company, Frontier Group Holdings Inc., on February 5, 2022.

The Spirit Airlines Board of Directors reaffirms its unequivocal suggestion that Spirit shareholders vote FOR the proposed merger with Frontier premised on the better terms provided by Frontier. Also, as part of the decision to recommend the merger deal, the Board of Directors of Spirit Airlines has reviewed JetBlue’s amended proposal submitted on June 20, 2022.

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Spirit turned down JetBlue’s offer that wasn’t a Superior Proposal.

Spirit’s leadership and advisors were then given instructions to hold extensive talks with JetBlue, which included negotiating the terms of JetBlue’s draft of the proposed merger and conducting comprehensive additional due diligence for JetBlue and its consultants. Nevertheless, the Board of Directors of Spirit decided that JetBlue’s amended offer wasn’t a Superior Proposal to that of Frontier after considering the amendment and the related discussions.

Spirit CEO Ted Christie said:

We are thrilled to announce the terms of Spirit’s amended agreement with Frontier, which includes nearly double the per-share cash consideration of our prior agreement with Frontier while still allowing stockholders to benefit from the economic upside of the airline industry recovery.

Under the terms of Frontier’s amended proposal, they will increase the amount paid to Spirit shareholders per share to $4.13 on top of the per-share consideration of 1.9126 Frontier shares that Frontier had agreed to issue to Spirit shareholders. Also, Frontier will pay Spirit shareholders a dividend of $2.22 per share on a date to be determined.

The reverse termination fee increased to $350 million

Reverse termination fees Frontier will pay to Spirit if the deal fails to be completed have been increased to $350 million. According to the Spirit Board, the merger is the most strategically and financially strategic path forward for shareholders with a high chance of closing.

Mac Gardner, Chairman of the Board of Spirit, said:

A merger with Frontier poses a less regulatory risk on Spirit stockholders and increases competition in the industry for the benefit of consumers. 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.

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