Carrier cites probable regulatory issues as core issue >>
by: Harvey Chipkin
Spirit Airlines’ board of directors unanimously rejected an unsolicited tender offer from JetBlue to acquire all outstanding shares of Spirit’s common stock for $30 per share in cash. The board, which had previously rejected a “friendly” offer, said the new proposal is not in the best interest of Spirits and its stockholders. In its comprehensive analysis, according to a statement, the board determined that the JetBlue transaction faces substantial regulatory hurdles, especially while the Northeast Alliance (NEA) with American Airlines remains in effect, and is, as a result, not reasonably capable of being consummated and is not superior to Spirit's agreed merger transaction with Frontier. Mac Gardner, chairman of the board, said JetBlue’s offer has not addressed the core issue of the significant completion risk and insufficient protections for Spirit stockholders He said that based on the carrier’s own research and the advice of antitrust and economic experts, the proposed combination of JetBlue and Spirit lacks any realistic likelihood of obtaining regulatory approval, while Spirit faces “a long and bleak limbo period as we await resolution.” In that scenario, said the statement, a $1.83 per share reverse break-up fee will not come close to adequately compensating Spirit stockholders for the significant business disruption Spirit will face during what JetBlue acknowledges will be a protracted regulatory process. The pending merger with Frontier is advancing as planned, said the statement, “and we continue to recommend that Spirit stockholders vote for the merger with Frontier on June 10th, as we believe the combination of these two ULCCs (ultra low-cost carriers) is the best way to deliver maximum value to Spirit stockholders."