Jetblue Launches Hostile Takeover Bid For Spirit Airlines

After Spirit Airlines rejected JetBlue’s $3.6 billion purchase offer earlier this month, JetBlue launched a hostile takeover proposal for the low-cost carrier, making the rivalry much tighter. JetBlue offered $30 per share to Spirit owners on Monday and requested them to vote against the Frontier merger at the airline’s board of directors meeting on June 10. If Spirit wanted to bargain, the company said it would still pay $33 per share. At the close of trade on Friday, Spirit Airlines shares were valued $16.98.

JetBlue rejected a $2.9 billion merger with Frontier earlier this month in return for an offer from JetBlue. According to Spirit’s board of directors, it seems doubtful that US regulators would allow JetBlue to acquire Spirit Airlines.

JetBlue said that this argument was only a “smokescreen” to conceal that its merger with Frontier is also subject to close regulatory scrutiny. Spirit stockholders would get a lesser price for their shares, according to a message from the airline’s CEO, Robin Hayes. “The Spirit Board did not follow a fair procedure or allow us to go “under the hood,” Hayes added.

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Spirit CEO Ted Christie said late Monday that the board spent a significant amount of time analyzing the JetBlue offer. On CNBC’s “Power Lunch,” he said that JetBlue was “feeding erroneous information into the market.” Spirit has determined whether or not to accept JetBlue’s offer.

Why Was The Arrangement Struck?

JetBlue claims that by acquiring Spirit, it will have a big fleet of Airbus planes, well-trained pilots, and the potential to compete more effectively with the “Big Four” US airlines. Both Spirit and Frontier claim that merging would help them expand and compete more effectively.

Spirit would be the fifth-biggest airline in the United States in any scenario. Unlike Spirit and Frontier, JetBlue is a full-service airline with free Wi-Fi, TVs at the back of the seats, and business class service on select flights. SAVE, and Frontier’s operating philosophies are comparable enough to promote efficiency, according to Sheila Kahyaoglu, an aviation analyst at Jefferies, in a note published on Monday. The legacy network providers face direct competition, particularly in the high-end regions where they have concentrated their efforts.

She believes Frontier and Spirit will continue to expand at the same pace whether they join since the merger will not affect how effectively they operate or how much it costs to do so. Bill Franke, the former CEO of Spirit and currently the chairman of Frontier Carriers, has long been an investor in low-cost airlines. Indigo Partners, the investment company he founded in 2013, purchased Frontier. Frontier and Franke did not respond to calls for comment on Monday. JetBlue’s Hayes said that the merger plans for Frontier and Spirit were harmful to Spirit’s investors.

This is a concerning indicator that the Spirit Board is not looking out for the best interests of its shareholders. In other words, what does the Spirit Board think? Hayes sent a message to everyone at work. According to our information, Frontier’s controlling shareholder has significant links and personal encounters with several Spirit Board members who backed the Frontier acquisition.

Jetblue Launches Hostile Takeover Bid For Spirit Airlines

It Is A Watershed Moment For Jetblue.

Spirit Airlines turned down JetBlue’s $3.6 billion cash offer last month. The New York-based airline is now at a fork in the road. Hayes said that acquiring Spirit will “supercharge” its expansion when new narrow-body aircraft are in high demand, but there aren’t enough pilots to fill them.

Spirit rejected JetBlue’s bid earlier this month, citing a lack of confidence in the deal’s approval by the government. It said that the Justice Department’s lawsuit against American Airlines and JetBlue for collaborating in the Northeast was part of its argument. “I’m not sure whether halting our contract with Frontier is truly their aim,” Spirit’s CEO stated earlier this month during a quarterly results presentation.

The US Administration Remained Silent On The Matter.

JetBlue offered further proposals that would have alleviated Spirit’s regulatory concerns, including selling part of Spirit’s properties in Florida, New York, and Boston. Spirit declined all of these offers. According to reports, JetBlue agreed to pay a $200 million “reverse breakup fee” if the purchase went through due to antitrust issues. JetBlue.

On Monday, Transportation Secretary Pete Buttigieg refused to comment on the deal, although he did indicate that the DOT would assist the Justice Department if it investigated the pact. In an interview with CNBC’s “Squawk Box”, he said that the most important thing to him is ensuring that the American people are adequately serviced by a robust aviation sector, which is a component of any healthy section of our economy.
On Monday, more than 13 percent of Spirit’s stock rose, while more than 6 percent of JetBlue’s stock fell. Despite a 0.4 per cent drop in the S& P 500, Frontier’s shares rose over 6 per cent on the day.

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