Rebuffed by Spirit, JetBlue Goes Hostile in Takeover Bid | Business News

By DAVID KOENIG and MICHELLE CHAPMAN, AP Business Writers

JetBlue launched a counter-acquisition bid for Spirit Airlines on Monday and asked shareholders of the low-cost carrier to reject Frontier Airlines ’proposed acquisition.

JetBlue hopes its move will push the Spirit board to the negotiating table after the board rejected the initial offer.

Spirit said it will “carefully review” JetBlue’s tender offer and plans to make a recommendation to shareholders within 10 business days. Spirit asked shareholders not to sell their shares in JetBlue until the board has completed the review.

Spirit shares, based in Miramar, Florida, jumped 13% in afternoon trading.

JetBlue placed a new offer of $ 30 per share in cash, or more than $ 3.2 billion, on Spirit stockholders but said the April 5 offer of $ 33 per share would still apply if Spirit enters into negotiations.

The Spirit board rejected JetBlue’s original $ 3.6 billion bid on May 2, saying antitrust regulators were unlikely to approve an offer from the New York City airline primarily because of its alliance with American Airlines in Northeast. The Justice Department was sued to block that deal.

Shareholders of Spirit Airlines Inc. scheduled to vote June 10 on the Frontier bid, which was unanimously favored by the Spirit board. The cash-and-stock offer was worth $ 2.9 billion when it was announced in February, but Frontier shares have declined 30% since, reducing the value of the deal.

JetBlue said it lowered the price of its offer because of Spirit’s reluctance to share financial information.

“The Spirit Board failed to provide us with the necessary information in the diligence it provided to Frontier and then rejected our proposal, addressing its regulatory concerns, without asking us a single question about it,” the CEO wrote. to JetBlue’s Robin Hayes in a letter. The Spirit Board based its rejection on unsupported claims that were quickly refuted.

Hayes said JetBlue offers a significant cash premium, greater security, and multiple benefits for all Spirit investors. He said JetBlue is confident of winning regulatory approval, and called Frontier’s bid high risk and low cost.

Frontier did not immediately respond to a request for comment.

The bid is from Frontier Group Holdings Inc. provides little money but will allow Spirit shareholders to retain 48.5% of the combined airline. It will give Spirit shareholders 1.9126 shares of Frontier and $ 2.13 cash for each share of Spirit.

Helane Becker, an analyst at banking firm Cowen, said the mean value of a Frontier-Spirit deal is “a fraction of the value of the (JetBlue) offer” of $ 30 per share of cash.

Any combination involving Spirit would make it the fifth largest airline in the country after American, Delta, United and Southwest.

Frontier and Spirit are both airlines that offer shorter fares and get more revenue from tackling fees for many things. JetBlue is more similar to the major airlines that are expected to acquire it. It usually charges a higher fare than discounted airlines, but it gives more space between the rows and adds entertainment including free TV.

The sale of JetBlue will remove Spirit’s planes and pilots from the lowest -cost area of ​​the U.S. airline industry. However, a Spirit Frontier claim can also be scrutinized more closely. Many prominent Democrats in congress have warned that a Frontier-Spirit merger could reduce competition and raise fares.

The shares of JetBlue Airways Corp. fell nearly 5% while shares of Frontier, which is based in Denver, rose more than 7% in afternoon trading.

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