Spirit renews support for Frontier merger after it boosts offer By Reuters

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© Reuters. FILE PHOTO: A logo of low cost carrier Spirit Airlines is pictured on an Airbus plane in Colomiers near Toulouse, France, November 6, 2018. REUTERS/Regis Duvignau//File Photo

By David Shepardson

(Reuters) -Spirit Airlines Inc said on Friday it has renewed its support for a merger deal with Frontier Group Holdings after Frontier raised its cash offer by $2 per share to buy the rival ultra-low-cost carrier, according to a regulatory filing https://www.sec.gov/Archives/edgar/data/0001498710/000149871022000264/save-20220624.htm.

On Monday, JetBlue Airways (NASDAQ:) sweetened its takeover offer for Spirit to $33.50 per share, an increase of $2, as it sought to convince Spirit’s board to agree to its deal. Frontier’s offer, at its closing price on Friday, is worth $24.29 in stock and cash.

Spirit’s board said on Friday that based on the improved offer from Frontier it “reiterates its unanimous recommendation that Spirit stockholders vote” in favor of the merger.

In a statement late on Friday, JetBlue said it continued to believe its proposal was superior to Frontier’s, but said it will “more thoroughly” review and assess the revised terms of Frontier’s proposal.

Spirit shareholders are set to vote on the Frontier takeover proposal on Wednesday.

Frontier stock closed up 6.6% on Friday at $10.54, while Spirit finished up 2.9% to $24.52. JetBlue shares gained 5.8% to close at $8.62.

The carriers have been involved in a tussle to create the fifth-largest U.S. airline, helping the buyer compete with larger legacy players at a time when the industry faces labor and aircraft shortages.

Under the terms of the offer, Frontier would pay $4.13 in cash, an increase of $2, and 1.9126 shares of Frontier per Spirit share. Frontier has agreed that $2.22 per share will be prepaid to Spirit stockholders as a cash dividend following approval of the transaction.

Frontier also increased its reverse termination fee to $350 million to Spirit if the deal is not completed for antitrust reasons.

Spirit’s board had previously rejected the JetBlue offer, arguing that U.S. antitrust regulators would not approve a tie- up with JetBlue and noting that JetBlue refused to abandon its alliance with American Airlines (NASDAQ:).

Either deal would face intense regulatory scrutiny.

The Justice Department filed an antitrust lawsuit against American and JetBlue in September seeking to end the alliance, saying it would lead to higher fares in busy airports in the U.S. Northeast.

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