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JetBlue launches hostile takeover of Spirit after its earlier acquisition was rejected

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JetBlue launches hostile takeover of Spirit after its earlier acquisition was rejected

JetBlue launched a hostile takeover bid for Spirit Airlines after a previous takeover bid was rejected. The New York-based airline said in a release that its $30-a-share offer was “all-cash” and “well-funded.”

Earlier this month, Spirit’s board rejected JetBlue’s $32-a-share offer to buy the airline, in favor of an existing merger agreement with Frontier, one of its ultra-low-cost rivals. The board cited antitrust concerns and an “unacceptable closing risk” to its shareholders as reasons for rejecting JetBlue’s takeover.

But JetBlue remains interested in acquiring Spirit, whether it wants to go ahead with the deal or not. The airline said absorbing Spirit would allow it to better compete with the “Big Four” airlines by increasing its fleet size and roster of trained pilots.

JetBlue still interested in acquiring Spirit, whether to go ahead with the deal or not

Robin Hayes, JetBlue’s chief executive, said in a statement: “JetBlue offers all stakeholders more value — a significant cash premium — more certainty and more benefits. “Frontier offers lower value, higher risk, no divestment commitments, and no reverse breakup fees, despite more overlap on direct routes and their own regulatory challenges.”

JetBlue is urging Spirit shareholders to vote against the Frontier deal. The company also said it remains open to a “voluntary $33 deal,” but will continue to pursue a hostile takeover in the meantime. Either combination would create the fifth-largest U.S. airline.

The antitrust issues cited by Spirit relate to JetBlue’s participation in American Airlines since 2000 under the umbrella of the North American Alliance (NEA), an initiative to combine services in New York City and Boston. The NEA aims to make it easier for passengers to board connecting flights on either airline and should bring more routes to both cities.

While both companies claim that NEA increases competition, the DOJ filed an antitrust lawsuit against the alliance in September 2021, saying it “would not only eliminate significant competition in these cities, but would also reduce JetBlue Airways by significantly reducing it. incentives to compete with the U.S. elsewhere, further cementing an already highly concentrated industry.”

JetBlue called Spirit’s antitrust concerns “a smokescreen to distract from the fact that its merger with Frontier faces similar regulatory risks, but provides no protection for shareholders.”

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