Frontier Airlines sweetens the deal for Spirit shareholders: Travel Weekly

Frontier Airlines has sweetened its purchase agreement with Spirit ahead of what will be a contentious June 10 shareholders vote over the proposed merger.

The ultralow-cost carriers (ULCCs) have jointly announced that they have amended their contract to include a $250 million reverse termination fee, which Frontier would pay to Spirit shareholders if the proposed merger were to be blocked by antitrust regulators at the Justice Department. 

“Since announcing our transaction with Frontier, we have had extensive constructive conversations with our stockholders, who have expressed support for the strategic rationale of our combination but a desire for additional stockholder protections,” Spirit CEO Ted Christie said in a prepared statement Thursday evening. “After discussing this feedback with the Frontier Board and management team, we have agreed to amend the merger agreement. We look forward to closing the transaction and bringing more ultralow fares to more people in more places.”

Comparing the JetBlue and Frontier offers

The move is a clearly a defensive one, coming as JetBlue is staging a full-throated effort to convince Spirit investors to vote no in the June 10 merger proxy. The New York-based low-cost carrier has put forward its own offer to purchase Spirit, which would include a $200 million reverse termination fee. JetBlue has also made an unsolicited purchase offer of $30 per share to acquire Spirit, and the carrier says it would pay as high as $33 per share in a negotiated agreement. 

Under the Frontier-Spirit agreement, Spirit shareholders would receive 1.9126 shares of Frontier stock, plus $2.13 for each of their Spirit shares. Frontier stock was at approximately $10.25 early in Friday’s trading day, making the value of Frontier’s offer approximately $22 per share.


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Spirit’s management and board of directors have repeatedly rejected JetBlue’s entreaties, saying that a merger between the two airlines would have little chance of being approved by antitrust regulators at the Justice Department. The DOJ is already suing to break up JetBlue’s and American’s Northeast Alliance. And Spirit argues that regulators would be more concerned about a merger of a higher-cost airline like JetBlue with a ULCC than a merger between two ULCCs. 

In a statement Thursday evening, JetBlue countered that the addition of a reverse termination fee to the Frontier-Spirit purchase agreement is “an acknowledgement that the regulatory profiles and timelines of both deals are indeed similar.”

“Spirit’s board only went back to Frontier under pressure, when it became increasingly clear their shareholders would decisively reject the Spirit board’s flawed process and Frontier’s inferior transaction,” JetBlue said. 

Frontier and Spirit announced their merger purchase agreement on Feb. 7. JetBlue made its first offer to Spirit on April 5.

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