JetBlue becomes hostile to Spirit Airlines purchase after rejection

CHICAGO/WASHINGTON, May 16 (Reuters) – JetBlue Airways Corp (JBLU.O) is not taking no for an answer in its quest to buy rival Spirit Airlines (SAVE.N).

The New York-based carrier launched a hostile cash takeover bid for Spirit Airlines on Monday, two weeks after the low-cost carrier rejected an offer from its biggest rival.

JetBlue, which was offering $33 a share in early April, is engaged in a Spirit takeover battle with Frontier Group Holdings (ULCC.O) and has argued a deal will help better compete with America’s “big four” airlines. which control nearly 80% of the passenger market.

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In a letter to Spirit shareholders on Monday, JetBlue offered $30 per share and said it was prepared to “negotiate in good faith a consensual transaction at $33, subject to due diligence.”

Spirit rejected the previous offer, saying it was unlikely to win approval from regulators. Read more

JetBlue disclosed on Monday that acquiring Spirit “has been a strategic objective of JetBlue for many years,” according to an April 29 letter sent to Spirit.

JetBlue said Monday it had filed a “Vote No” proxy circular urging Spirit shareholders to vote against the proposed merger with Frontier, which rose 4% in early trading. Frontier’s cash and stock value for each share of the discount carrier on Monday was recently $19.48 per share.

Shares of Spirit rose 8% to $18.32 in early trading. JetBlue shares fell 3.4% to 9.72%

JetBlue said “Spirit’s board prioritizes its own interests and its personal relationship with Frontier over the interests of its shareholders.”

He added “Ask yourself a simple question: Why isn’t the Spirit Board engaging with us in a constructive way? The interests of Bill Franke’s Indigo Partners and the long-standing relationship between the two companies are the obvious answer.”

Frontier, Spirit and Franke did not immediately respond to Reuters requests for comment.

Spirit will hold a shareholders’ meeting on June 10 to vote on its proposed merger with Frontier. Read more

JetBlue said Monday that on March 29, its chief executive Robin Hayes first called Spirit chief executive Ted Christie to tell him of the airline’s interest in buying Spirit.

JetBlue, the sixth-largest U.S. passenger carrier, reportedly operates Spirit under the JetBlue brand and doesn’t believe a divestiture is necessary, but has promised a reverse break fee of $200 million, or $1.80 per Spirit share. , and plans to divest Spirit’s holdings in New York and Boston to address any overlap.

Spirit in April had requested a significantly higher reverse breakage fee, JetBlue said.

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Reporting by Rajesh Kumar Singh in Chicago, Tanvi Mehta in Bengaluru and David Shepardson in Washington; Editing by Sriraj Kalluvila, David Evans and Lisa Shumaker

Our standards: The Thomson Reuters Trust Principles.

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