Frontier Airlines Improves Offer for Merger with Spirit Airlines

Jun 27, 2022 By MarketDepth

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Frontier Airlines (NASDAQ: ULCC) has improved its offer to merge with Spirit (NYSE: SAVE) as shareholders approach the date to vote on the matter. The new deal provides USD4.13 per share, a USD2 increase from its original bidding, as it continues to rival JetBlue.

“We continue to be excited about the Spirit-Frontier combination, which will create a true nationwide ultra-low-fare airline. The strategic rationale of a combined Spirit and Frontier remains sound, and the changes we have made to our merger agreement provide greater value for all Spirit stockholders – value that is well in excess of JetBlue’s illusory proposal, which lacks any realistic likelihood of obtaining regulatory approval.”

In a letter to spirit stockholders, Frontier

JetBlue argues that its deal is expected to help it compete against the biggest carriers out there and grow at a quicker pace. JetBlue’s would ultimately take over spirit, meanwhile, a Frontier-Spirit merger would form a larger discount carrier. Both deal’s will result in the country’s fifth-largest airline.

Taking JetBlue Latest offer into Consideration

According to Spirit CEO Ted Christine, the airline’s board has taken JetBlue’s latest offer into consideration but still has concerns on whether or not regulators would approve the deal. He states that the board does view the Frontier merger as “a superior transaction.”

Proxy advisory firm ISS, has also recommended the company lean towards the Spirit-Frontier deal.

“On balance, support for the merger with Frontier on the revised terms is warranted,” ISS said

Spirit shares fell 5% Monday and have a current market cap of USD2.12 Billion.