Spirit delays vote on merger with Frontier, as bidding war with JetBlue heats up.
Spirit Airlines has delayed a shareholder vote on its proposed merger with Frontier Airlines amid an escalating bidding war, with JetBlue Airways trying to muscle in on the deal. The vote, originally scheduled for Friday, was pushed to June 30. In a statement on Wednesday, Spirit said the extra time would allow its board “to continue discussions with Spirit stockholders, Frontier and JetBlue Airways,” which has offered a rival bid for the airline. Early last week, a prominent shareholder advisory firm, Institutional Shareholder Services, issued a report recommending that Spirit shareholders reject the Frontier deal “as a signal to the board” to negotiate with JetBlue, which Spirit’s directors have repeatedly spurned. ISS said it was reasonable to assume that the Frontier deal would have an easier time winning regulators’ approval, but disagreed with Spirit’s assertion that a merger with JetBlue had virtually no chance because of antitrust issues. Frontier responded by addressing one of ISS’s concerns, promising to pay Spirit a $250m breakup fee if regulators prevent an agreed merger. JetBlue had initially offered a $200m payment under the same circumstances. Then another influential shareholder advisory firm, Glass Lewis, weighed in, recommending that Spirit shareholders approve the Frontier deal. This week, JetBlue improved its offer, raising its breakup fee to $350m and offering to pay a portion upfront to shareholders should they approve its offer. JetBlue’s CE, Robin Hayes, said that the postponement of the vote was “a necessary first step toward genuine negotiation.” He added, “Spirit shareholders are clearly urging the Spirit board to engage with us constructively.” Industry analysts generally agree that Spirit’s proposed merger with Frontier, which was jointly announced in February, would make for a simpler combination. Both airlines operate similar low-cost business models, but with different geographic strengths. Acquiring Spirit also makes sense for JetBlue, which has struggled to grow as much as it would like, though combining the two airlines would have its challenges.<br/>
https://portal.staralliance.com/cms/news/hot-topics/2022-06-09/unaligned/spirit-delays-vote-on-merger-with-frontier-as-bidding-war-with-jetblue-heats-up
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Spirit delays vote on merger with Frontier, as bidding war with JetBlue heats up.
Spirit Airlines has delayed a shareholder vote on its proposed merger with Frontier Airlines amid an escalating bidding war, with JetBlue Airways trying to muscle in on the deal. The vote, originally scheduled for Friday, was pushed to June 30. In a statement on Wednesday, Spirit said the extra time would allow its board “to continue discussions with Spirit stockholders, Frontier and JetBlue Airways,” which has offered a rival bid for the airline. Early last week, a prominent shareholder advisory firm, Institutional Shareholder Services, issued a report recommending that Spirit shareholders reject the Frontier deal “as a signal to the board” to negotiate with JetBlue, which Spirit’s directors have repeatedly spurned. ISS said it was reasonable to assume that the Frontier deal would have an easier time winning regulators’ approval, but disagreed with Spirit’s assertion that a merger with JetBlue had virtually no chance because of antitrust issues. Frontier responded by addressing one of ISS’s concerns, promising to pay Spirit a $250m breakup fee if regulators prevent an agreed merger. JetBlue had initially offered a $200m payment under the same circumstances. Then another influential shareholder advisory firm, Glass Lewis, weighed in, recommending that Spirit shareholders approve the Frontier deal. This week, JetBlue improved its offer, raising its breakup fee to $350m and offering to pay a portion upfront to shareholders should they approve its offer. JetBlue’s CE, Robin Hayes, said that the postponement of the vote was “a necessary first step toward genuine negotiation.” He added, “Spirit shareholders are clearly urging the Spirit board to engage with us constructively.” Industry analysts generally agree that Spirit’s proposed merger with Frontier, which was jointly announced in February, would make for a simpler combination. Both airlines operate similar low-cost business models, but with different geographic strengths. Acquiring Spirit also makes sense for JetBlue, which has struggled to grow as much as it would like, though combining the two airlines would have its challenges.<br/>
