JetBlue is going hostile in its effort to take over Spirit. It is the latest twist in an ongoing industry battle for the low-cost airline carrier, CNN reports.
Spirit previously rejected an offer from JetBlue to take over the carrier. It favored instead an earlier deal to merge with another budget airline, Frontier Airline.
But now JetBlue is going right to the shareholders of Spirit. It urged them to vote against the Frontier deal, and launched its own all-cash offer of $30 a share.
The earlier offer from JetBlue was for $33 a share cash offer. Spirit said that it did not believe a merger with the company would be cleared by regulators and that because there was such a completion risk, they believed JetBlue’s economic offer to be “illusory.”
The Spirit board said it was going to stick with a cash and stock deal that was reached in January with Frontier. The deal was valued at that time at $25.83 for each Spirit share. However, Frontier shares have fallen since then. They were slightly higher in premarket trading today due to the news of a potential hostile JetBlue takeover, but even with that rise, its offer is worth less than $20 a share.
If Spirit and Frontier combined to form a new airline, it would leapfrog JetBlue and Alaska Air in the number of miles flown by paying passengers. This puts it behind the four major airlines, which control about 80 percent of the air traffic in the U.S.
Both Spirit and Frontier operate as ultra-low-cost. They have very low base fares, and there are extra charges for practically everything, including carry-on baggage.
When Spirit rejected JetBlue’s original bid, it said that it believes a merger with Frontier will enable the combined business to achieve scale and compete more effectively against the big carriers, as well as against JetBlue.
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