Connect with us

Business

Spirit Board rejects JetBlue acquisition proposal, sticks to the limit

After reviewing a revised proposal from JetBlue Airways that offered a $ 200 million reversal fee if the transaction is not terminated for antitrust reasons, Spirit Airlines’ Board of Directors unanimously rejected the airline’s bid in favor of its proposed merger with Frontier Airlines. Spirit announced Monday. The JetBlue proposal “is not reasonably capable of being executed,” according to Spirits’ board.

“After a thorough review and extensive dialogue with JetBlue, the Board of Directors determined that the JetBlue proposal entailed an unacceptable level of closure risk that Spirit shareholders would assume,” Spirit Chairman H. McIntyre Gardner said in a statement.

Spirits’ board of directors cited the US Department of Justice’s antitrust case against JetBlue’s partnership with American Airlines, called the Northeast Alliance, as a key reason why it expects JetBlue’s potential acquisition of Spirit to fail.

Frontier Airlines announced in February a deal to buy Spirit for about $ 2.9 billion in cash and shares. At that time, the boards of directors of both airlines had unanimously approved the proposed agreement. On April 5, JetBlue submitted an unsolicited competitive bid for Spirit for $ 33 per share in cash, valued at $ 3.6 billion. Under the merger agreement, which Frontier filed in February, Spirit could walk away from the Frontier deal if Spirits’ board of directors decided it had received a “superior proposal” and paid Frontier $ 94.2 million in cash.

In addition to the $ 200 million reverse break-up fee, JetBlue also offered in its revised proposal a “solution package” to address concerns about the Northeast Alliance. The package will include “disposal of all Spirit assets in New York and Boston so that JetBlue does not increase its presence at the airports covered by NEA,” according to JetBlue. “The package will also include ports and assets at other airports, including Fort Lauderdale.”

In a letter dated May 2 to JetBlue’s CEO Robin Hayes, Spirits Gardner and CEO Edward Christie III wrote that Spirit “has a low probability of receiving antitrust approval as long as JetBlue’s Northeast Alliance with American Airlines exists. The US Department of Justice, together with the Attorneys General of six states and the District of Columbia, has sued to block the NEA, claiming that the alliance ‘will not only eliminate important competition in (Boston and New York City), but will also harm air travelers across the country by significantly reduces JetBlue’s incentive to compete with US elsewhere, further consolidating an already highly concentrated industry. ‘ “

Spirit responded to JetBlue on April 25 that it proposed a “strong pact requiring JetBlue to take all necessary action to obtain regulatory approval, which specifically included abandoning NEA upon closure,” according to Spirit. Monday’s letter to JetBlue noted that JetBlue’s revised proposal “makes it clear that JetBlue is not willing to terminate the NEA.”

JetBlue did not immediately respond to a request for comment.

Click to comment

Leave a Reply

Your email address will not be published.