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JetBlue Initiated Measures For Hostile Takeover Of Spirit Airlines

JetBlue Initiated Measures For Hostile Takeover Of Spirit Airlines
JetBlue Airways Corp launched an aggressive all-cash acquisition bid for Spirit Airlines Inc on Monday, two weeks after the cheap carrier turned down a larger rival's offer.
JetBlue, which offered $33 per share in early April, is in a takeover war with Frontier Group Holdings for Spirit, claiming that a merger will help it better compete with the "Big Four" US airlines, who dominate roughly 80% of the passenger market.
JetBlue proposed $30 a share in a letter to Spirit shareholders on Monday, saying it was willing to "discuss in good faith a consensual transaction at $33 subject to receiving sufficient diligence."
Spirit turned down the prior bid, claiming it had a slim chance of getting regulatory approval.
On Monday, JetBlue said it had filed a "Vote No" proxy statement encouraging Spirit shareholders to vote against the planned merger with Frontier, which would pay cash and shares for each share of the bargain carrier, which was valued at $18.81 on Friday.
Spirit's stock jumped more than 17 per cent to $19.90 in premarket trading. JetBlue's stock fell by 1.5 per cent.
Frontier and Spirit have made no remarks on the matter.
On June 10, Spirit's shareholders will vote on the planned merger with Frontier.
JetBlue CEO Robin Hayes called Spirit CEO Edward Christie on March 29 to inform him of the airline's interest in buying the airline, and wrote in a letter that "the combination of our two companies would create a leading player best positioned to serve our customers by offering increased flight schedules and more competitive fares."
JetBlue, the sixth largest U.S. passenger carrier, plans to operate Spirit under the JetBlue name and believes no divestitures are necessary, but has committed a $200 million reverse break-up fee, or $1.80 per Spirit share, if the acquisition falls through due to antitrust concerns.
Spirit had requested a substantially greater reverse break-up cost in April, according to JetBlue.

Christopher J. Mitchell

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