JetBlue sweetens offer for Spirit, boosts breakup fee, adds cash payment

The revised offer increases JetBlue's reverse breakup fee by $150 million and provides for about $164 million payable as a cash dividend

Spirit Airlines
Spirit Airlines (Photo: Bloomberg)
Mary Schlangenstein | Bloomberg
2 min read Last Updated : Jun 06 2022 | 7:24 PM IST
JetBlue Airways Corp. improved its offer for Spirit Airlines Inc., boosting a breakup provision to $350 million and adding an upfront cash payment just days before shareholders will vote on a pending buyout agreement with Frontier Group Holdings Inc.

The revised offer increases JetBlue’s reverse breakup fee by $150 million and provides for about $164 million payable as a cash dividend “promptly following” a vote approving a combination of the carriers, the airline said in a statement Monday. The update comes after Frontier sweetened its own agreement by adding a key $250 million fee payable to Spirit if their accord breaks up on antitrust grounds. 

JetBlue is aiming to build more support among Spirit shareholders for its higher, all-cash offer ahead of a June 10 vote. It needs them to vote against Frontier’s stock-and-cash deal, initially valued at $2.9 billion, to preserve its best chance for a quick infusion of growth that will help it compete against larger US carriers. Spirit rejected JetBlue’s initial $3.6 billion offer, prompting a subsequent $3.3 billion hostile tender bid. 

Spirit shareholders are faced with conflicting recommendations from prominent shareholder advisory firms. Institutional Shareholder Services Inc. found JetBlue’s all-cash offer superior from a financial standpoint and that both bids have inherent risks when it comes to federal antitrust reviews. A rejection by Spirit investors would signal their board to restart talks with JetBlue, it said.

Proxy advisory firm Glass Lewis & Co. subsequently recommended Frontier’s proposal, calling it “the best available and most actionable” alternative.

Shares of Spirit jumped 7.5% in the premarket to $22.30. JetBlue was down 0.2% to $10.45.

One subscription. Two world-class reads.

Already subscribed? Log in

Subscribe to read the full story →
Subscribe to Business Standard digital and get complimentary access to The New York Times

Quarterly Starter

₹900

3 Months

₹300/Month

SAVE 25%

Smart Essential

₹2,700

1 Year

₹225/Month

Save 46%

Super Saver

₹3,900

2 Years

₹162/Month

Subscribe

Renews automatically, cancel anytime

Here’s what’s included in our digital subscription plans

Access to Exclusive Premium Stories Online

  • Over 30 behind the paywall stories daily, handpicked by our editors for subscribers

Complimentary Access to The New York Times

  • News, Games, Cooking, Audio, Wirecutter & The Athletic

Business Standard Epaper

  • Digital replica of our daily newspaper — with options to read, save, and share

Curated Newsletters

  • Insights on markets, finance, politics, tech, and more delivered to your inbox

Market Analysis & Investment Insights

  • In-depth market analysis & insights with access to The Smart Investor

Archives

  • Repository of articles and publications dating back to 1997

Ad-free Reading

  • Uninterrupted reading experience with no advertisements

Seamless Access Across All Devices

  • Access Business Standard across devices — mobile, tablet, or PC, via web or app

Topics :cashpayments

Next Story