Spirit Airlines Decides on Merger Between JetBlue and Frontier
Spirit Airlines has looked at the financials on pending merger offers from Frontier Airlines and JetBlue Airlines and they have chosen a partner.
According to the Philadelphia Business Journal, Spirit Airlines will encourage its shareholders to again vote in favor of the deal with Frontier Airlines, saying they feel JetBlue's competing offer has "an unacceptable level of closing risk" for stockholders.
"Our board unanimously determined that JetBlue's proposal does not constitute a 'superior proposal' under Spirit's existing merger agreement with Frontier," Spirit Chairman Mac Gardner wrote in the letter to JetBlue.
"We believe a combination of JetBlue and Spirit has a low probability of receiving antitrust clearance so long as JetBlue's Northeast Alliance with American Airlines remains in existence."
Spirit seems to think that JetBlue would have a difficult time convincing the Department of Justice that their deal wasn't an anticompetitive alliance that would harm travelers and other airlines.
"Given this substantial completion risk, we believe JetBlue's economic offer is illusory, and Spirit's board has not found it necessary to consider it," Gardner wrote.
On Feb. 7, Spirit agreed to merge with Denver-based Frontier in a deal that values the Atlantic City carrier at about $2.9 billion.
The deal would have Frontier taking 51% control over the combined company, allowing it to have the final call on terms including where its headquarters would be located.
The merger, if approved, would combine two of the four largest carriers at Philadelphia International Airport. Frontier is the second-largest airline operating out of Philly, while Spirit is the fourth.
JetBlue's proposal was an unsolicited bid pricing Spirit at $3.6 billion. JetBlue's all-cash deal would have given it total control over Spirit.
Pending approval from shareholders and regulatory agencies, Spirit Air and Frontier hope to close on their deal before the end of the year.