After huddling with outside legal and financial advisors, Spirit Airlines announced that its Board of Directors has unanimously decided to reject a hostile takeover effort recently taken by JetBlue.
The directors believe the JetBlue deal would face substantial regulatory hurdles, especially while the Northeast Alliance ("NEA") with American Airlines hangs in the balance. In their estimation, the potential deal is not superior to the merger Spirit has already agreed to with Frontier.
Just in case Spirit stockholders were leaning towards supporting the deal with JetBlue, the Spirit Board has written them a letter asking them not to. Instead, they're urging shareholders to vote for the merger agreement with Frontier.
“In that scenario, a $1.83 per share reverse break-up fee will not come close to adequately compensating Spirit stockholders for the significant business disruption Spirit will face during what JetBlue acknowledges will be a protracted regulatory process,” wrote Mac Gardner, Chairman of the Board of Directors for Spirit Airlines.
JetBlue responds
As much as it seems like some Spirit officials would like JetBlue to just go away, the company is not giving up on its merger goal.
“It’s no surprise that Spirit shareholders are getting more of the same from the Spirit Board. The Spirit Board, driven by serious conflicts of interest, continues to ignore the best interests of its shareholders by distorting the facts to distract from their flawed process and protect their inferior deal with Frontier,” JetBlue said in a statement.
JetBlue added that the merger deal between Spirit and Frontier is also far from a slam dunk when it comes to regulatory approval.
"Both deals are subject to regulatory review, and both deals have a similar risk profile. Frontier offers less value, more risk, and no regulatory commitments, despite a similar regulatory profile," JetBlue said in its response.
"We are confident that as we continue to share the facts directly with Spirit shareholders, they will be even more perplexed than they already are about why the conflicted Spirit Board has refused to negotiate with us in good faith. We believe that the Spirit shareholders will make their views known by voting against the Frontier offer and tendering their shares into our offer."