Breaking Business Spirit And Frontier Airlines Cancel Merger Plans—Opening Door For JetBlue’s Offer Marisa Dellatto Forbes Staff I cover breaking news, arts and entertainment. New! Follow this author to improve your content experience. Got it! Jul 27, 2022, 05:31pm EDT | Share to Facebook Share to Twitter Share to Linkedin Topline Spirit Airlines and Frontier Airlines canceled their agreement to merge Wednesday, opening the door to rival airline JetBlue, which has also submitted a bid to acquire Spirit.
Spirit Airlines aircrafts are shown at the George Bush Intercontinental Airport in Houston, Texas. Getty Images Key Facts Spirit CEO Ted Christie said the company is “disappointed” to terminate the Frontier deal, which was first struck in February but thrown into uncertainty after JetBlue made an unsolicited offer to buy Spirit in April. Spirit will “continue our ongoing discussions with JetBlue” in order to “pursue the best path forward for Spirit and our stockholders,” Christie said.
The termination came as the result of a vote on the Frontier merger by Spirit shareholders was supposed to be announced—which Spirit had repeatedly delayed . Frontier said Spirit is obligated to pay for its $25 million in merger-related costs, and if Spirit enters into another acquisition in the next year, it will be owed an additional $69 million. In a statement to Forbes , JetBlue said it is “pleased that the merger agreement with Frontier has been terminated” and it remains “fully committed to completing this transaction.
” Key Background Frontier—which, like Spirit, is a budget airline—went public last year. Spirit’s merger with either JetBlue or Frontier would create the nation’s fifth largest airline, and significantly consolidate the low-cost airline industry. Spirit’s board had rejected a previous all-cash offer from JetBlue in May, saying it “recommends that Spirit shareholders adopt the merger agreement with Frontier,” though Frontier’s offer at the time was less lucrative.
Weeks later, JetBlue began attempting a hostile takeover of Spirit. Spirit again suggested its shareholders reject the airline’s bid, saying JetBlue’s offer was “a cynical attempt to disrupt Spirit’s merger with Frontier, which JetBlue views as a competitive threat. ” Earlier this month, Frontier CEO Barry Biffle said his airline was “very far” from earning backing for the deal from Spirit’s shareholders.
Tangent Just because Frontier’s agreement with Spirit is dead doesn’t mean JetBlue’s will automatically go through. JetBlue is being sued by the Justice Department over a partnership with American Airlines at Boston and New York airports, and Spirit rejected JetBlue’s earlier acquisition offers due to fears the federal government could block the deal due to antitrust concerns. Further Reading Spirit Airlines and Frontier call off a proposed merger (New York Times) Spirit and Frontier End Merger Agreement (Wall Street Journal) Spirit terminates merger agreement with Frontier that was marred by JetBlue’s rival bid (CNBC) Follow me on Twitter .
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From: forbes
URL: https://www.forbes.com/sites/marisadellatto/2022/07/27/spirit-and-frontier-airlines-cancel-merger-plans-opening-door-for-jetblues-offer/
