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JetBlue Sweetens Spirit Proposal with More Cash

Not to be deterred from acquiring Spirit Airlines, JetBlue is now bringing more cash to the negotiating table, increasing their bid to $31.50 per share, including a $350 million reverse breakup fee.
Despite being rebuked by Spirit Airlines, JetBlue is bound and determined to absorb the low-cost carrier.


In a press release, the New York-based company announced an “Improved Superior Bid” for Spirit, which includes a higher all-cash price and increased reverse break-up fee.


Third Bid Includes Reverse Break-Up Fee Pre-Payment, Promises of Divestures

Under the third proposal forwarded by JetBlue and airline chief executive Robin Hayes, the carrier is now offering an “enhanced” reverse breakup fee of $350 million if the merger is blocked by regulators. Nearly half of that fee – $164 million – would be paid upfront as a cash dividend to Spirit shareholders. In total, JetBlue’s would pay $31.50 per Spirit Share in the all-cash deal.


“The key features of our Improved Proposal – the up-front cash payment and increased reverse break-up fee – are not an illusion,” Hayes wrote in the letter to Spirit with their third bid. “This offer reflects the seriousness of our commitment and underscores our confidence in completing this transaction. Additionally, given the similar regulatory risks of the two transactions and the increased reverse break-up fee we are prepared to provide, we believe our Improved Proposal remains a Superior Proposal by any measure.”


JetBlue isn’t just offering value to the company’s executive team and shareholders. In a separate message to Spirit employees, Hayes released a video statement outlining what a potential merger could mean for their jobs. The airline head argued that merging with his airline offers “higher pay and better benefits than either Spirit or Frontier,” along with a commitment to increase their presence in Orlando and Fort Lauderdale.


To maintain the Northeast Alliance with American Airlines, JetBlue is also promising to get rid of all Spirit assets in the Boston and New York markets if the merger is approved. Spirit is one of several airlines to express opposition to the partnership, which is currently being challenged in court by the U.S. Department of Justice.


In their own statement, Spirit acknowledged they received the proposal, and would “work with its financial and legal advisors to evaluate JetBlue’s proposal and pursue the course of action it determines to be in the best interests of Spirit and its stockholders.”


Third JetBlue Bid Comes After Frontier’s Improved Deal

The latest attempt by JetBlue to win over Spirit comes after Frontier Airlines improved their offer, with the hopes of creating the nation’s largest low-cost carrier. Under the amended agreement, the Denver-based airline added a $250 reverse termination fee if the deal is blocked by the Departments of Justice or Transportation.


Feature image courtesy: JTOcchialini/Flickr/CC BY-SA 2.0