After reviewing a revised proposal by JetBlue Airways that offered a $ 200 million reverse break-up fee that would not have been terminated due to mistrust, Spirit Airlines Board of Directors unanimously rejected Carrier’s proposal for its proposed merger with Frontier Airlines, Spirit. Announced Monday. According to the Spirit Board, the JetBlue proposal is “not capable of being logically fulfilled.”
“After a thorough review and extensive discussions with JetBlue, the Board determined that the JetBlue proposal involved an unacceptable level of risk that would be assumed by Spirit stockholders,” said Spirit Chairman H.J. McIntyre Gardner said in a statement:
The Spirits Board cited a U.S. Department of Justice’s no-confidence motion against JetBlue’s partnership with American Airlines, the so-called Northeast Alliance, as the main reason why it expects Jetblue’s acquisition of Spirit to fail.
Frontier Airlines announced in February a deal to buy spirits for about 2. 2.9 billion in cash and stock. At the time, the boards of both carriers unanimously approved the proposed deal. JetBlue has bid an unsolicited bid for 5 33 per share in cash for the April 5 spirits, valued at $ 3.6 billion. According to the merger agreement Frontier filed in February, Spirit could withdraw from the Frontier agreement if the Spirit Board determined that it had received a “higher offer” and paid Frontier ন 94.2 million in cash.
In addition to the $ 200 million reverse break-up fee, JetBlue has provided a “remedy package” in its revised proposal to address the concerns of the Northeast Alliance. According to JetBlue, the package would include “splitting of all spirit assets in New York and Boston so that JetBlue does not increase its presence at airports covered by the NEA.” “The package will include gates and resources at other airports, including Fort Lauderdale.”
In a May 2 letter to Robin Hayes, CEO of JetBlue, Spirits Gardner and CEO Edward Christie III wrote that Spirit “as long as JetBlue’s Northeast alliance with American Airlines is maintained, antitrust clearances are less likely in the U.S. Department of Justice. The Attorney General and the District of Columbia have sued the NEA for blocking, alleging that the alliance “not only (Boston and New York City) will eliminate significant competition, but will significantly harm air travelers across the country. To compete with Americans elsewhere.” Reducing JetBlue’s incentives, further consolidating an already highly concentrated industry. ‘ “
Spirit responded to JetBlue on April 25 by saying that it had “proposed a strong agreement that would require JetBlue to take any action necessary to obtain regulatory clearance, including abandonment, especially when closing the NEA,” according to Spirit. Monday’s letter to JetBlue noted that JetBlue’s revised proposal “makes it clear that JetBlue is not willing to cancel the NEA.”
JetBlue did not immediately respond to a request for comment.