JetBlue launches hostile takeover bid for Spirit after rejection of previous acquisition

JetBlue launched a hostile takeover of Spirit Airlines after its previous acquisition offer was rejected. The New York-based airline said in a statement that its $30 per share tender offer was “all cash” and “fully funded.”

Earlier this month, Spirit’s board rejected JetBlue’s $32-per-share bid to acquire the airline in favor of an existing merger deal with Frontier, one of its ultra rivals. -low cost. The board cited antitrust concerns and “an unacceptable level of closing risk” to its shareholders as reasons for rejecting JetBlue’s offer.

But JetBlue still intends to acquire Spirit, whether or not it wants to close the deal. The airline said the absorption of Spirit would allow it to better compete with the “big four” carriers by increasing the size of its fleet and its roster of trained pilots.

“JetBlue delivers more value – a significant cash bonus – more certainty and more benefits for all stakeholders,” JetBlue CEO Robin Hayes said in a statement. “Frontier offers less value, more risk, no surrender commitments and no reverse break fees, despite more overlap on nonstop routes and their own regulatory challenges.”

JetBlue urges Spirit shareholders to vote against the Frontier deal. The company also said it remained open to a “consensual $33 transaction” but would proceed with its hostile takeover in the interim. Either combination would create the fifth largest airline in the United States.

Spirit’s reference to antitrust concerns relates to JetBlue’s involvement with American Airlines since 2000 under the umbrella of the North American Alliance (NEA), an initiative to combine services in New York and Boston. The NEA aims to make it easier for passengers to board connecting flights from either airline and is supposed to offer more connections to the two cities.

While both companies claim the NEA increases competition, the Justice Department filed an antitrust lawsuit against the alliance in September 2021, stating that it will “not only eliminate significant competition in these cities, but also harm air travelers across the country by dramatically reducing JetBlue’s offering.” an incentive to compete with Americans elsewhere, further consolidating an already highly concentrated industry.

JetBlue calls Spirit’s antitrust concerns “a smokescreen to distract from the fact that its merger with Frontier faces similar regulatory risk, but offers no shareholder protection.”

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