Spirit Airlines will pursue potential merger talks with JetBlue after it backed out of a merger deal with Frontier Airlines. Shares of the three airlines changed little after-hours trading after the announcement.
“Going forward, the Spirit Board of Directors will continue its ongoing discussions with JetBlue as we pursue the best path forward for Spirit and our shareholders,” Spirit CEO Ted Christie said in a statement.
Frontier Chairman William Franke said: “While we are disappointed that Spirit Airlines shareholders have failed to recognize the value and consumer potential inherent in our merger proposal, Frontier’s Board of Directors has adopted a disciplined approach throughout its negotiations with Spirit. We have been focused on delivering the appropriate value for Spirit, while putting consumers and the best interests of Frontier, our employees and our shareholders first.”
Franke added that his airline remains well positioned to deliver significant shareholder value while meeting the growing demand for affordable air travel.
Frontier reported Wednesday that operating revenue increased 43% to $909 million from the second quarter of 2019 pre-COVID.
Frontier and JetBlue have been in a months-long bidding war over the ultia-low-cost carrie rivalr headquartered in Miramar, Florida.
|Teleprinter||Security||Last||To change||To change %|
|TO REGISTER||SPIRIT AIRLINES INC.||24:30||+0.92||+3.93%|
|BLUE||JETBLUE AIRWAYS CORP.||8:40 am||+0.29||+3.58%|
|ULCC||FRONTIER GROUP HOLDINGS||11.27||+0.68||+6.42%|
Spirit shareholders had deliberated between a stock and cash offer from Frontier worth about $22 per share, or $2.4 billion, that would give Spirit shareholders 48.5% of the airline combined and a hostile bid from JetBlue worth $33.50 per share, or $3.6 billion. .
The bidding war for America’s largest budget carrier began in February after Frontier Airline’s parent company, Frontier Group Holdings, and Spirit announced a definitive merger agreement “under which the companies will merge, creating America’s most competitive ultra-low-cost airline.”
In the ad, Frontier touted consumers would save millions by getting more ultra-low fares to more cities.
Spirit Airlines said in April it had received an “unsolicited proposal” from JetBlue to buy all outstanding shares of Spirit to break up the potential merger. At $33 per share, the offer represented a 50% premium to Spirit’s closing stock price the day before the announcement.
Although JetBlue’s initial offer was rejectedthe company persisted, offering several revised proposals since then.
Both airlines have repeatedly tried to persuade the low-cost carrier to reject the competing bid and issue statements explaining why their airline would provide greater value to shareholders and customers.
The decision was not easy for Sprit, who delayed a vote on the proposed merger with Frontier twice to continue merger talks between its shareholders and the two competing airlines.
“Unlike the compelling Spirit-Frontier combination, an acquisition of Spirit by high-fare carrier JetBlue would result in fewer options and more expensive travel for consumers,” Frontier said in a public notice to Spirit shareholders in may.
Meanwhile, JetBlue told Sprit shareholders in June that if they wanted “more value and more certainty, sooner,” they should vote “against the Frontier transaction.”
JetBlue CEO Robin Hayes has previously argued that a “JetBlue-Spirit transaction would create a true domestic competitor for the Big Four and deliver value to all of our stakeholders” while delivering “lower fares and a better experience to more customers”.
The Associated Press contributed to this report.