JetBlue Airways JBLU continues its quest for acquiring Spirit Airlines SAVE, proposing higher reverse break-up fee and adding a ticking fee. The move follows Frontier Group Holdings’ ULCC recently enhanced takeover offer for Spirit Airlines.
Per the enhanced proposal, JetBlue will prepay $2.50 per share as cash dividend to Spirit Airlines’ shareholders soon after they vote in favor of the deal. This is higher than the prepayment of $1.50 per share, as agreed upon previously. JBLU has also increased the reverse break-up fee to $400 million from the previously proposed $350 million, payable to Spirit Airlines in case the deal fails to materialize due to antitrust concerns.
JetBlue’s improved proposal also includes a ticking fee that would provide Spirit Airlines’ shareholders with a monthly prepayment of 10 cents per share between January 2023 and the closing or termination of the deal. This increases the transaction value to $34.15 per share.
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JetBlue is urging Spirit Airlines shareholders to not vote in favor of the deal with Frontier, which is set to be voted upon by shareholders on Jun 30.
After JetBlue’s successive revised takeover offers to Spirit Airlines, Frontier recently boosted its acquisition proposal with increased per-share cash consideration and higher reverse termination fees.
It was Frontier that first proposed an offer to acquire Spirit Airlines in February. Back then, ULCC had proposed a $2.9-billion deal, by dint of which Spirit Airlines’ shareholders would have received $25.83 per share.
The takeover battle between JetBlue and Frontier comes at a time when the airline industry is seeing surging travel demand, thanks to easing coronavirus-led restrictions and pent-up demand. Both carriers are aiming to take advantage of the buoyant scenario through the takeover of Spirit Airlines. While there is strong demand, the industry is struggling with aircraft and staffing shortages.
Each of the stocks mentioned above carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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JetBlue Airways Corporation (JBLU) : Free Stock Analysis Report
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