Advisory firm urges Spirit shareholders to vote against merger with Frontier

Spirit Airlines’s shareholders should vote against a proposed merger with Frontier Airlines in favor of a competing offer from JetBlue Airways, a prominent shareholder advisory firm recommended on Tuesday. The firm, Institutional Shareholder Services, said that while the rival offer from JetBlue might face more regulatory scrutiny, it would offer Spirit investors more money and more choice, depending on whether they expect the recovery in travel demand to falter. Many large investors take ISS’s recommendations seriously when deciding how to vote on corporate proposals, director candidates and other matters. “On balance, a potential agreement with JetBlue would appear to offer shareholders superior optionality, allowing those concerned with the turbulence ahead to exit at a significant premium, while allowing those with a more optimistic outlook to reinvest,” ISS said. JetBlue’s cash offer represented a 56% premium to Frontier’s cash-and-stock offer as of last Wednesday, ISS said. Spirit and Frontier announced a proposal to merge in February. Weeks later, JetBlue countered with its own offer. Spirit’s board declined that offer and urged shareholders to reject a subsequent takeover bid, arguing that the deal has little chance of being approved by antitrust regulators and may simply represent a “cynical attempt” to disrupt its merger. Airline analysts generally agree that a merger between Spirit and Frontier would be easier to execute because the airlines operate a similar low-cost business model with different geographical strengths.<br/>