JetBlue To Acquire Major Airline?
JetBlue has been in an all out legal brawl as it attempts to acquire a major airline and they may have finally succeeded.
This article is more than 2 years old
JetBlue has been continuously trying to acquire Spirt Airlines. But, a delayed shareholder vote puts the decision up in the air. Frontier Airlines is also attempting to purchase Jet Blue, but that deal has also been shoved aside. JetBlue could have a shot at buying the major airline in the upcoming weeks.
Both airlines, JetBlue and Frontier, are competing to acquire the well-known American carrier. A meeting with Spirit Airlines’ shareholders regarding the Frontier acquisition was supposed to happen last month. The meeting was then postponed to June 28th, with a final decision to delay the meeting until July 15th. The pushback makes it seem more likely that Spirit will go with JetBlue’s deal rather than Frontier’s.
In April, JetBlue made a lofty proposal to purchase Spirit Airlines. The $3.6 billion offer was startling to many, but the most absurd proponent was the included all-cash proposal. JetBlue’s monetary proposal is far more significant than Frontier’s, which began at $2.9 billion. The repeated pushback of the meetings has allowed Jet Blue to swoop in with an even heftier deal, relegating Frontier to a less enticing position. JetBlue’s massive proposal has switched many shareholders’ preferences, who may now be leaning towards an agreement with the carrier.
JetBlue’s CEO, Robin Hayes, is very confident that Spirit Airlines will choose his carrier to acquire the company. After discussions with shareholders, Hayes believes they have “indicated their clear, overwhelming preference” for JetBlue’s deal. Hayes made this statement after the delayed meeting, assured that the pushback was due to Spirit’s deep interest in JetBlue over Frontier. Though the JetBlue CEO finds the meeting postponements a move in his favor, the outcome won’t be decided until the shareholders hold an official vote.
Though Robin Hayes expects a positive reception from his latest deal, his last two proposals to Spirit have not been received positively. In fact, Spirit’s board continuously rejected JetBlue’s past acquisition deals, believing regulators would disapprove of the partnership. JetBlue even attempted to give a better incentive to Spirit shareholders, adding an in-cash allowance of $31.50 per share for each board member. The company more than doubled its reverse break-up fee in its recent acquisition proposal from $150 million to $350 million. If the deal falls through, Spirit shareholders will receive the entirety of this break-up fee. A heightened termination fee could give Spirit’s board more reason to side with JetBlue.
Still, Spirit’s board could go either way in its acquisition finalization. Though JetBlue is making a more expensive offer, Spirit could still side with Frontier after its upcoming meeting. It is expected that Spirit’s shareholder meeting delays might have something to do with contention on the board over Frontier’s acquisition deal. Frontier recently amended its deal to give more money to Spirit’s board, but it’s unclear if that changed shareholders’ minds about the airline in general.
Both Spirit and Frontier got an increase in their stock prices from the possible partnership. Each carrier’s stock value went up by 4% last Friday morning. JetBlue, unfortunately, had a dip in its stock market value. Though not considered substantial, JetBlue’s stock did go down by 1% by Friday’s closing.
