With two days to go until stockholders decide, the Board of Directors of Spirit Airlines has – once again – reaffirmed its commitment to the merger agreement with Frontier Airlines. It rates this offer superior to that of JetBlue, even as the New York-based airline improved its offer again on June 27. Spirit Board sticks to Frontier offer.

In a media statement, Spirit CEO Ted Christie says: “The latest offer from JetBlue does nothing to address our Board’s serious concerns that a combination with them would not receive regulatory approval. That unsolved issue, combined with the fact that their offer is still substantially below the potential $50 per share or more of value that we expect will result from a merger with Frontier, affirms our analysis that our merger agreement with Frontier provides more value and certainty to our stockholders.”

JetBlue increased its accelerated pre-payments to $2.50 per share, structured as a cash dividend. And it increased the reverse break-up fee by another $50 million to $400 million. The offer also includes the addition of a ticking fee mechanism, which would provide shareholders with a monthly prepayment of $0.10 per share between January 2023 and the consummation or termination of the transaction. This represents an estimated aggregate ticking fee of up to $1.80 per share, of which the first $1.15 per share in payments will offset the reverse break-up fee or the merger consideration.

But Spirit says: “JetBlue’s offer is still substantially below the potential $50 per share or more that could result from a merger with Frontier and does not offer significantly greater economics than prior proposals. The JetBlue “ticking fee” has no economic effect for 18 months after signing. Since the vast majority of the reverse termination fee (“RTF”) would be paid out in October 2022, and thus is a sunk cost at the time real decisions have to be made in respect of regulatory approvals, the RTF itself provides little economic incentive for JetBlue to do what it takes to complete the deal.

Last week, JetBlue’s Robin Hayes said in Doha that he was optimistic that Spirit stockholders would vote in favor of his offer after an open due diligence process. But Christie thinks differently: “While we have engaged with JetBlue for weeks and provided them a level playing field on which they could make their best offer, unfortunately, they have now turned to scurrilous rhetoric instead of a substantive improvement in their offer. We are focused on proceeding with our agreement with Frontier, and we appreciate the continued support of ISS and Glass Lewis as well as the feedback from many stockholders who intend to vote in support of the transaction.”

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Active as journalist since 1987, starting with regional newspaper Zwolse Courant. Grand Prix reporter in 1997 at Dutch monthly Formule 1, general reporter Lelystad/Flevoland at De Stentor/Dagblad Flevoland, from 2002 until June 2021 radio/tv reporter/presentor with Omroep Flevoland.
Since mid-2016 freelance aviation journalist, since June 2021 fully dedicated to aviation. Reporter/editor AirInsight since December 2018. Contributor to Airliner World, Piloot & Vliegtuig. Twitter: @rschuur_aero.

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