Spirit delays shareholder vote to June 30 after JetBlue raises takeover bid to $3.4 billion

June 8, 2022, 3:56 PM UTC
Spirit Airlines
A Spirit Airlines plane takes off from the Fort Lauderdale-Hollywood International Airport on May 16, 2022 in Fort Lauderdale, Florida. Spirit is pushing back shareholder vote to June 30.
Joe Raedle—Getty Images

Spirit Airlines Inc.’s board postponed a crucial June 10 vote to gain more time to build shareholder support for a company-backed buyout deal with Frontier Group Holdings Inc., days after JetBlue Airways Corp. raised its rival takeover offer to $3.4 billion and added an upfront cash payment. 

The balloting was reset for June 30, giving Spirit directors time to continue discussions with Spirit shareholders and both of its suitors, the board said in a statement Wednesday. Spirit is still bound by terms of the stock-and-cash takeover agreement with Frontier initially valued at $2.9 billion, still recommends that deal and hasn’t determined that JetBlue’s proposal is superior, according to the statement. 

Spirit shares rose 0.3% to $22.74 as of 9:45 a.m. in New York. JetBlue fell 1.1% and Frontier lost 1.3%.

JetBlue is hoping its higher bid, which includes an upfront cash payment, eventually will win the approval of Spirit’s board while also building more support among Spirit shareholders for its offer ahead of any future vote. At stake for JetBlue is possibly its best bet for a fast track to growth that would position it as a more formidable competitor to the four major carriers that dominate the U.S. market. 

“We welcome this development as a necessary first step toward genuine negotiation between the Spirit board and JetBlue,” JetBlue Chief Executive Officer Robin Hayes said in a separate statement Wednesday. “Spirit shareholders are clearly urging the Spirit board to engage with us constructively.”

Frontier didn’t immediately respond to a request for comment.

Deep discounter deal

A Frontier-Spirit deal would unite two major deep discounters, propelling them past Alaska Air Group Inc. and JetBlue to become the fifth-largest U.S. airline based on domestic passenger traffic. Spirit rejected JetBlue’s initial $3.6 billion all-cash offer, prompting it to take a $3.3 billion tender bid directly to shareholders.

Spirit investors received conflicting advice on the contest from two prominent proxy evaluation services.  

Institutional Shareholder Services Inc. reiterated its support for the JetBlue bid after reviewing updated proposals from both suitors, saying the latest offer “tips the scales” in its favor. Proxy advisory firm Glass Lewis & Co. has recommended Frontier’s proposal, calling it “the best available and most actionable” alternative.

In its most recent bid, JetBlue boosted a reverse breakup provision to $350 million from $200 million and included an upfront cash payment of $164 million, or about $1.50 a share, to address concerns that Spirit shareholders would have to wait through a lengthy regulatory review of the combination before receiving any cash.

Frontier sweetened its original offer on June 3 with a $250 million breakup fee that would be paid to Spirit if the deal collapses because of objection from US regulators. The move addressed a critical concern in the ISS report.

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