As the fight for Spirit Airlines Inc. reaches its final stages, JetBlue Airways Corp. increased its bidding war with Frontier Group Holdings on Monday.
In a time when the U.S. airline sector is plagued by staffing and aircraft constraints, both bidders view Spirit as a chance to increase their domestic footprints. The fifth-largest U.S. airline would be produced by any of the agreements.
As part of the revised proposal, JetBlue included a “ticking charge” that would grant Spirit owners a monthly prepayment of 10 cents per share from January 2023 until the deal’s closure, increasing the deal’s overall worth to $34.15 per share.
If the merger is rejected by regulators, the New York-based carrier will also boost the breakup fee it would pay to Spirit by $50 million, for a total of $400 million. After the deal is approved, it will also pay Spirit owners a cash dividend of $2.50 per share in advance.
After Frontier increased its offer for Spirit last Friday, the most recent offer was made.
Institutional Shareholder Services (ISS), a company that advises shareholders, changed its mind in response to Frontier’s improved offer and now advises Spirit owners to support a merger with the Denver-based low-cost airline. Another proxy company, Glass Lewis, has also endorsed the Frontier acquisition.
On June 30, Spirit shareholders will cast their votes on the merger agreement with Frontier. The company’s amended bid for Spirit, according to Frontier Chief Executive Barry Biffle, will be sufficient to close a merger with the ultra-low-cost airline, he told Reuters on Monday.
Biffle stated, “We’re incredibly thrilled about it and getting terrific response.
However, JetBlue is not yet prepared to give up. It once more encouraged Spirit shareholders to reject the Frontier transaction on Monday, claiming that its proposal would provide them with “greater value and stability.”