JetBlue Believes Combination With Spirit Would Be Welcomed by Department of Justice

Photo Credit: Joris Wendt/AviationSource

LONDON – American carrier JetBlue believes the combination & merger with Spirit Airlines would be welcomed by the Department of Justice.

In a press release handed out by the carrier, the airline referred to Glenn Pomerantz, who discussed how the DoJ would welcome this acquisition.

“In fact, the DOJ calls the ‘JetBlue Effect’ uniquely disruptive and beneficial to passengers”.

“If you’re worried about the passengers who really want an ultra-low-cost alternative, those alternatives will be there. There are plenty of other ultra-low-cost carriers, who will enter and take over a route of Spirit’s if that route is profitable.”

“Frontier is out there…and there are Allegiant and Sun Country and some recent entrants as well. So, everyone’s going to win if JetBlue and Spirit merge.”

The rest of the discussion was made via a video by the carrier.

Continued Pressure Ahead of Friday’s Vote…

Placing a release like this comes as no surprise as JetBlue remains committed to ensuring that Spirit Airlines goes for its deal instead of the merger with Frontier Airlines.

The carrier even improved its offer once again yesterday, with the following three elements sticking out:

  • Enhanced reverse break-up fee: JetBlue would provide a $350 million ($3.20 per Spirit share1) reverse break-up fee, payable to Spirit in the unlikely event the transaction is not consummated for antitrust reasons. This represents an increase of $150 million, or $1.37 per Spirit share, to the reverse break-up fee JetBlue has previously offered to pay and is $100 million greater than the amount being offered by Frontier.
  • Accelerated prepayment of $1.50 per share: JetBlue would prepay $1.50 per share in cash (approximately $164 million) of the reverse break-up fee, structured as a cash dividend to Spirit stockholders promptly following the Spirit stockholder vote approving the combination between Spirit and JetBlue.2
  • Superior, all-cash premium: JetBlue’s proposal offers Spirit stockholders aggregate consideration of $31.50 per share in cash, comprised of $30 per share in cash at the closing of the transaction and the prepayment of $1.50 per share of the reverse break-up fee.

Spirit Urges Rejection…

Spirit Airlines has urged shareholders earlier last month to reject JetBlue’s hostile takeover bid over the perspective that the deal would hurt shareholders in the company.

Commenting on this at the time was Mac Gardner, the Spirit Chair of the Board of Directors:

“JetBlue’s tender offer has not addressed the core issue of the significant completion risk and insufficient protections for Spirit stockholders.”

“Based on our own research and the advice of antitrust and economic experts, our view is that the proposed combination of JetBlue and Spirit lacks any realistic likelihood of obtaining regulatory approval, while our company faces a long and bleak limbo period as we await resolution.

In that scenario, 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.”

“Our pending merger with Frontier is advancing as planned, 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 is the best way to deliver maximum value to Spirit stockholders.”

It remains clear at this stage as well that Gardner is just as committed to getting this deal across the line as Hayes is to stealing this from Frontier’s grasp.

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