Spirit Airlines jumps 5% as JetBlue sweetens its bid

Jun. 27, 2022 6:26 PM ETSpirit Airlines, Inc. (SAVE), JBLU, ULCCBy: Jason Aycock, SA News Editor30 Comments

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Spirit Airlines (NYSE:SAVE) rose 5.2% after hours Monday after JetBlue (NASDAQ:JBLU) announced it's modifying its offer for the airline, adding a ticking fee and increasing a proposed reverse breakup fee.

JetBlue said it's conveying the new proposal to Spirit's board and is urging Spirit shareholders to vote against Frontier's "inferior" offer.

In the new offer, JetBlue increased accelerated prepayment to $2.50 per share, structured as a cash dividend to Spirit shareholders "promptly" following a shareholder vote in favor of the deal.

Along with a reverse breakup fee raised to $400M (payable to Spirit if the deal is rejected for antitrust reasons), a ticking fee would provide shareholders with a monthly prepayment of $0.10 per share between January 2023 and the consummation or termination of the deal.

That's an aggregated ticking fee of up to $1.80 per share, with the first $1.15 per share offsetting the reverse breakup fee or the merger consideration, JetBlue says.

“Spirit shareholders should not be misled by Spirit and Frontier’s rosy projections of a potential future stock price, which are based on highly flawed assumptions that fail to account for the actual market conditions, including the need for pilot pay increases and elevated fuel costs," JetBlue CEO Robin Hayes said.

"The entrenched Spirit Board has approved a revised deal that is ultimately better for Frontier and its controlling shareholder than it is for Spirit shareholders," Hayes added.

Frontier Group Holdings (NASDAQ:ULCC) is up 1.6% after hours.

Spirit (SAVE) shares fell early Monday as management backed a sweetened offer from Frontier (ULCC).

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