HIt has no fury like a despised airline. Two weeks after the rejection of its merger proposal, JetBlue becomes hostile in its efforts to acquire Spirit Airlines. Today, JetBlue issued a direct appeal to Spirit shareholders to vote against the “lower, high-risk, low-value” Frontier deal and adopt its own all-cash offer of $30 per share.
“This represents a 60% premium to the value of the Frontier transaction as of May 13, 2022 – a very compelling offer and above the premium implied by JetBlue’s original proposal,” according to a statement from JetBlue. The airline added that it was willing to discuss a $33 per share deal if Spirit stopped withholding due diligence information about its business.
Earlier this month, Spirit rejected an offer from JetBlue in favor of budget airline Frontier’s less lucrative offer of $21.66 in cash and stock for every share of the discount carrier. JetBlue argued that acquiring Spirit would allow it to compete with the so-called “big four” US carriers – American, Delta, United, Southwest – which together control nearly 80% of the market.
At the time, Spirit said he did not believe a JetBlue-Spirit merger would receive antitrust clearance due to JetBlue’s Northeast Alliance (NEA) with American Airlines. “We find it hard to understand how JetBlue can believe that the DOJ, or a court, will be persuaded that JetBlue should be allowed to form an anti-competitive alliance that aligns its interests with a legacy carrier, and then undertake an acquisition that will eliminate the larger [ultra-low-cost carrier]wrote Mac Gardner, Chairman of the Board of Spirit.
“Frontier offers less value, more risk, no surrender commitments and no reverse break fees, despite more overlap on nonstop routes and their own regulatory challenges,” JetBlue CEO Robin Hayes writes to Spirit shareholders. “Ask yourself a simple question: Why isn’t the Spirit Board engaging with us constructively? The interests of Bill Franke’s Indigo Partners and the longstanding relationship between the two companies is the obvious answer.
Octogenarian Bill Franke, newcomer to Forbes List of world billionaires, built his fortune by investing in low-cost airlines. He is the current president of Frontier Airlines and the former president of Spirit Airlines. His private equity firm Indigo Partners owns a majority stake in Frontier and stakes in several low-cost airlines around the world, including Wizz Air in Europe, Volaris in Mexico and Lynx Air in Canada.
JetBlue suggests that Franke’s history with Spirit Airlines unfairly influences the airline’s board of directors. “The Spirit Board failed to provide us with the necessary due diligence information it provided to Frontier, and then summarily rejected our proposal, which addressed its regulatory concerns, without asking us a single question about it,” JetBlue said. in today’s letter to Spirit shareholders. JetBlue has also launched a website at JetBlueOffersMore.com.
Shares of Spirit rose more than 14% to $16.98 in premarket trading.
Spirit has a shareholders’ meeting scheduled for June 10 to vote on its proposed merger with Frontier.