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“JetBlue Being Hostile!” A new takeover bid for Spirit

Even Facing two major rebuffs by Spirit, JetBlue is still set on its takeover! On Monday, May 16, JetBlue launched a rather hostile bid on the Spirit Airlines takeover. They also requested the shareholders to reject Frontier’s already proposed bid for acquisition. 

JetBlue has positive spirits that the airline board will now be at the negotiating table rather than the previous rejection. Now, let’s move on to clear out the facts that currently stand still with this hostile action by JetBlue!

Current Situation: The new bid and JetBlue-Spirit Tie up!

  • JetBlue Airways launched its hostile takeover offer to Spirit after it declined the earlier one.
  • Originally JetBlue offered a 33 USD share which the Spirit Airlines board declined and chose to plan the merger with Frontier Airlines.
  • The current offer is a hostile one with 30 USD for each share, along with a request to vote against the deal by frontier.
  • JetBlue’s previous offer is also on the table if Spirit decides to negotiate further.

JetBlue has sweetened already. Now Spirit must reconsider its best suitor!

JetBlue had already offered a $33 bid per share for the Spirit Airlines shareholders, but they were keen on Frontier’s 2.9 billion dollars stock and cash deal. The board also claimed that they think US regulators won’t approve any acquisition by JetBlue.

However, JetBlue rebuffed that by saying it’s just a distraction for people not to get hung up on the fact that Frontier’s deal also faces the same risks. 

Spirit Said they would carefully review the tender offer by JetBlue

The airline also planned to make a recommendation to the shareholders within just ten days. With this, the CEO of Spirit urged the shareholders to remain silent until the final decision from the board comes out.

JetBlue Takeover Bid 3.0

JetBlue Airways pitched its new offer that is 30 USD per share all-cash. Or, a 3.2 billion dollars to Spirit. The airline even highlighted that the previous offer still stands at 33 USD per share if Spirit has room for negotiations.

As per the Spirit’s Miramar and Florida numbers jumped almost to 13.5%, however, they were still closed at $19.27, being still far from JetBlue’s offer.

Previously Spirit rejected the 3.6 billion dollar takeover bid for the reason that the antitrust US regulators may not approve an offer from an NYC airline because of its alliance with the American.

Voting on the BID

Spirit Airlines Inc. Shareholders will vote on the 10th of June for Frontier’s earlier bid that seems unanimously favored by the board. In February, the cash-and-stock offer had a value of 2.9 billion dollars. However, due to a huge fall of 30% in shares, the value of the deal has now been reduced.

As per the statements from Spirit airlines:

  • Frontier Holdings Group Inc.’s current bid offers less cash whereas allowed Spirit shareholders own a total of 48.5 percent stake as they combine as one.
  • It will give Spirit shareholders 1.9126 shares of Frontier plus $2.13 per Spirit share in cash.
  • Spirit and Frontier are the same in terms of their low fares, and they also generate more revenue by charging for many things. 
  • However, JetBlue is more of a big airline that it hopes to catch. It usually charges higher fares than budget airlines but offers extras like more interline space and free TV.

They believe that selling Spirit to JetBlue would remove Spirit’s planes and pilots from the ultra-low-cost niche of U.S. aviation. 

However, Spirit’s cutting-edge acquisitions could also come under scrutiny. Several famous Democrats congressional have warned that a merger of Frontier and Spirit could reduce competition and drive up prices.

However, with a merger with JetBlue, Spirit could still thrive well. Though they can dispel its original motto, the legacy carrier can still make up for its name.

JetBlue Airways shares fell 6%, while shares of Denver-based Frontier closed down 6%. Let’s be positive and look up to the airline’s decision after the 10 days.

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