F9 ups the bid. Boom!
#1
F9 ups the bid. Boom!
https://finance.yahoo.com/news/spiri...213000861.html
Spirit Airlines Announces Amended Merger Agreement with Frontier, Including Increased Per-Share Cash Consideration and $350 Million Reverse Termination Fee
Fri, June 24, 2022, 3:30 PMFollowing Thorough Process Focused on Value and Certainty, Spirit Board of Directors Reiterates Recommendation that Spirit Stockholders Adopt Merger Agreement with FrontierSpirit Engaged in Extensive Discussions with JetBlue; Spirit Board of Directors Determined JetBlue’s Offer is Not a Superior Proposal
Special Meeting of Spirit Stockholders Scheduled for June 30, 2022 at 9am ET
MIRAMAR, Fla., June 24, 2022--(BUSINESS WIRE)--Spirit Airlines, Inc. ("Spirit" or the "Company") (NYSE: SAVE) today announced the signing of a second amendment (the "Amended Agreement") to its previously announced merger agreement with Frontier Group Holdings, Inc. ("Frontier") (NASDAQ: ULCC), parent company of Frontier Airlines, Inc., dated February 5, 2022.
Based on the improved terms offered by Frontier, the Spirit Airlines Board of Directors reiterates its unanimous recommendation that Spirit stockholders vote FOR the merger agreement with Frontier. As part of its determination to recommend the Frontier merger agreement, Spirit’s Board of Directors carefully reviewed the terms of JetBlue’s revised proposal received on June 20, 2022 and instructed Spirit’s management and advisers to engage in extensive discussions with JetBlue, including negotiating further the terms of JetBlue’s draft merger agreement and providing extensive additional due diligence to JetBlue and its advisors. After considering this review and discussions, Spirit’s Board of Directors determined JetBlue’s revised offer is not a Superior Proposal.
Under the terms of the Amended Agreement, which has been approved by the Boards of Directors of both companies:
- Frontier will increase the per-share cash consideration payable to Spirit stockholders to $4.13 in cash, in addition to the per-share stock consideration of 1.9126 shares of Frontier that Frontier previously agreed to pay Spirit stockholders.Frontier has also agreed that $2.22 per share will be prepaid to Spirit stockholders on a record date to be determined as a cash dividend following approval of the transaction by Spirit stockholders and consistent with all applicable laws, including restrictions under the CARES Act. The $2.22 per share dividend will be funded by Frontier.
- Frontier will increase its reverse termination fee to $350 million to Spirit in the unlikely event the combination is not consummated for antitrust reasons.
- The number of directors of the combined company to be named by Frontier will increase by one and the number of directors of the combined company to be named by Spirit will decrease by one.
- With both cash and stock consideration, the Frontier merger offers Spirit stockholders compelling value now, plus the economic upside of continued ownership at a time when the airline industry outlook is only getting brighter.
- Today, airline sector stock prices are approaching the lows seen during the depths of the pandemic in 2020. Within a year of those lows, Spirit was trading above $39 per share, having more than quadrupled in price.
- The outlook for the sector is bright, with TSA check-point traveler numbers equaling or exceeding 2019 levels in recent months and with airline unit revenues reaching their highest levels in ten years.
- The Spirit Board is focused on maximizing value for Spirit stockholders by agreeing to a transaction that provides a combination of near-term cash and exposure to the airline sector recovery.
- Today, airline sector stock prices are approaching the lows seen during the depths of the pandemic in 2020. Within a year of those lows, Spirit was trading above $39 per share, having more than quadrupled in price.
- Under the revised terms of the Frontier merger agreement, the pro forma value to Spirit stockholders by 2024 could exceed $50 per share, driven by the equity upside from the realization of synergies, airline sector recovery, and the ongoing growth of both airlines. Based on work done by Spirit advisors, this assumes:
- Wall Street analyst earnings forecasts for 2024E;
- Realization of $500 million in annual net operating synergies; and
- The pro forma company trades at a price-to-earnings multiple of 11x, based on Spirit’s 2017-2019 pre-pandemic average.
- Wall Street analyst earnings forecasts for 2024E;
- In addition to the substantial future value creation available, Spirit stockholders will receive the benefit of a near-term cash dividend following approval of the transaction at the Special Meeting on June 30, 2022.
Spirit Board Conducts Thorough Process and Determines JetBlue’s Offer is NOT a Superior Proposal
The Spirit Board of Directors conducted a thorough process when considering competing proposals from JetBlue and Frontier. JetBlue and Frontier had access to the same due diligence information, on the same terms. Spirit’s process included extensive discussions with Frontier and JetBlue regarding financial terms, regulatory risks and integration processes. Spirit ultimately received revised proposals from both parties this week. Following the conclusion of this process, the Spirit Board determined that the revised offer Spirit received from JetBlue on June 20, 2022 is not a Superior Proposal and continues to recommend Spirit stockholders adopt the merger agreement with Frontier.
A JetBlue transaction faces significantly greater regulatory impediments than a Frontier transaction.
- Although Spirit has continued to engage with JetBlue and its advisors regarding regulatory matters and strategy, Spirit does not believe that a JetBlue transaction will overcome regulatory objections.
- Spirit has long taken the position that excessive consolidation in the airline industry over the last two decades has resulted in the three legacy airlines dominating domestic air travel. Merging Spirit into JetBlue and its Northeast Alliance ("NEA") with American Airlines will exacerbate regulators’ valid concerns over airline industry concentration. The proposed Spirit/Frontier combination will, by contrast, create a stronger, more relevant, and more effective nationwide ULCC challenger to the dominant carriers.
- JetBlue has made it clear that it is committed to the NEA, which Spirit believes is an anticompetitive and unlawful de facto merger between American and JetBlue that aligns JetBlue’s interests broadly with a legacy carrier. Spirit believes the existence of the NEA makes it even more unlikely that JetBlue’s acquisition of Spirit will be approved. Indeed, the DOJ has sued to block the NEA between JetBlue and American Airlines on grounds that the NEA is anticompetitive, which further increases the regulatory risk of JetBlue’s offer to acquire Spirit and the likelihood that the DOJ will be able to block a JetBlue/Spirit combination.
- Although JetBlue’s revised offer purports to provide improved regulatory commitments, JetBlue has insisted on maintaining a significant carve-out allowing JetBlue to refuse to take actions needed to gain regulatory approval if – in JetBlue’s sole and absolutediscretion – any such actions would materially and adversely affect JetBlue’s anticipated benefits under its NEA venture with American. This broad carve-out creates an unacceptable risk for Spirit stockholders and only confirms that JetBlue will prioritize the NEA over the completion of a transaction with Spirit.
- The proposed merger of Spirit and Frontier would create a better and more disruptive nationwide ULCC competitor to the Big Four carriers, further democratizing air travel and bringing more ultra-low fares to more destinations. By contrast, a JetBlue/Spirit combination will result in a higher-cost and higher-fare airline that would eliminate a lower-cost and lower-fare airline and remove about half of the ULCC capacity in the United States, resulting in higher fares for consumers.
Barclays and Morgan Stanley & Co. LLC are serving as financial advisors to Spirit, and Debevoise & Plimpton LLP and Paul, Weiss, Rifkind, Wharton & Garrison LLP are serving as legal advisors.
Your Vote Is Important
Spirit has scheduled the Special Meeting of Stockholders (the "Special Meeting") to approve the proposed merger with Frontier for Thursday, June 30, 2022 at 9:00 a.m., Eastern Time. All stockholders of record as of the close of business on May 6, 2022 are entitled to vote at the Special Meeting.
The Spirit Board of Directors strongly recommends you vote FOR the merger agreement on the WHITE proxy card. As a reminder, a vote against Frontier is not a vote for JetBlue, nor will it necessarily lead to a transaction with JetBlue. It is simply a vote against entering into a highly accretive transaction that is less challenging to complete from a regulatory perspective. To ensure your vote is counted, vote on the WHITE proxy card today. For more information on how to vote for the merger, please call the Company’s proxy solicitor, Okapi Partners, on their toll-free number
#4
Gets Weekends Off
Joined APC: Apr 2019
Posts: 330
I think it's been clear for several years that a wedding of F9 & NK was going to place, but JetBlue threw a wrench into the mix and now F9 is "playing" the game. That said, I'll be glad when it's all over. It's quite possible JetBlue will have to slightly increase its font on the FOR SALE sign.
#5
I'm honestly shocked by this from Franke and the hang.
JB has to have a plan for this, you'd think. I'd expect another offer from them.
Wasn't there word going around that JB would drop the NEA if push comes to shove? This might push that into existence.
JB has to have a plan for this, you'd think. I'd expect another offer from them.
Wasn't there word going around that JB would drop the NEA if push comes to shove? This might push that into existence.
#6
Gets Weekends Off
Joined APC: Nov 2016
Posts: 541
Last I read they weren’t willing to give up the NEA.
#8
Line Holder
Joined APC: Apr 2022
Position: A320 captain
Posts: 91
I don't buy the regulatory approval concern on Spirit's part.
In 2008 Delta merged or acquired Northwest in a time of poor economic outlook, and then United and Continental in 2010.
Both got by the regulators, and in comparison B6/NK is small potatoes.
In 2008 Delta merged or acquired Northwest in a time of poor economic outlook, and then United and Continental in 2010.
Both got by the regulators, and in comparison B6/NK is small potatoes.
#10
Gets Weekends Off
Joined APC: Feb 2011
Posts: 172
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