Spirit Declines JetBlue Acquisition Offer of $3.6 Billion

Issue 121

Spirit Airlines Was met with a counteroffer to their initial plans to merge with Frontier Group Holdings Inc. The merger, which is valued at $2.9 billion, was met with a counteroffer by JetBlue Airways offering Spirit a $3.6 billion takeover.

Despite the much larger offer, Spirit has declined the bit due to fear from the company’s board that the acquisition would face significant regulatory setbacks.  JetBlue responded by pledging to shed assets as well as pay $200 million breakup fee to better win regulatory approval and mitigate antitrust concerns.  However, despite JetBlue’s best-efforts investors believe that there is too much risk associated with the acquisition and will continue to go with Frontier.  

Spirit has stated “We struggle to understand how JetBlue can believe DOJ, or a court, will be persuaded that JetBlue should be allowed to form an anticompetitive alliance that aligns its interests with a legacy carrier and then undertake an acquisition that will eliminate the largest [ultra-low cost] carrier.”  Despite Spirit’s reluctance JetBlue has stated that they will not give up and believe their offer is superior.

The desired acquisition of Spirit will allow either company to become the fifth largest airline company throughout the United States and would allow to better compete with larger, more dominant carriers.

Source: Wall Street Journal