Advisers tell Spirit shareholders to reject Frontier bid

May 31, 2022, 10:22 AM | Updated: 7:31 pm

NEW YORK (AP) — A firm that advises investors on proxy voting said Tuesday that Spirit Airlines shareholders should oppose Frontier Airlines’ bid to buy Spirit, saying that a competing offer by JetBlue is financially superior.

Institutional Shareholder Services Inc. conceded that Spirit’s board might be correct in concluding that the Frontier offer has a better chance of winning approval from antitrust regulators. However, the firm said, both bids carry regulatory risks but only the JetBlue offer includes a $200 million breakup fee in case regulators reject it.

ISS said Spirit shareholders should reject the Frontier offer to signal its board to negotiate further with JetBlue, possibly to get a bigger breakup fee.

Shareholders of Miramar, Florida-based Spirit are scheduled to vote June 10 on whether to approve Frontier’s stock-and-cash offer, which was valued at $25.83 per share or $2.8 billion when announced in February. The offer’s value has sunk 26% to $19.19 per share since then because of a drop in the value of Frontier shares, ISS said.

JetBlue made an all-cash offer of $33 per share, or $3.6 billion, in April, and when that was rebuffed, it launched a tender offer at $30 per share, or $3.2 billion.

While New York-based JetBlue wants to acquire 100% of Spirit, the Frontier offer would let Spirit shareholders keep 48.5% of the new, combined airline.

The Spirit board’s view “that more patient shareholders would reap greater benefits by staying invested in a combined Frontier/Spirit could prove out over time,” ISS acknowledged. But it said a sale to JetBlue would give Spirit shareholders a significant premium while airline stocks are down and let those who are optimistic about the sector reinvest the premium.

Spirit CEO Ted Christie said the company continues to believe the Frontier deal is better for his shareholders. He said that during discussions between the companies, “JetBlue admitted that a lawsuit (by the U.S. Justice Department) seeking to block a merger with Spirit was a 100% certainty.”

JetBlue CEO Robin Hayes said the ISS report highlighted the need for Spirit board of directors to negotiate with JetBlue — “this time in good faith.”

Frontier declined to comment.

Shares of Spirit Airlines Inc. closed up 2%, Denver-based Frontier Group Holdings Inc. gained 3%, while JetBlue Airways Corp. fell 1%.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

(Facebook Photo/Superior Court of Arizona in Yavapai County)...
Associated Press

Arizona judge has cases reassigned following DUI arrest

The Arizona Supreme Court has ruled that all cases currently assigned to a Yavapai County Superior Court judge recently arrested on suspicion of extreme DUI will be reassigned to other judges.
2 days ago
Haitian migrant Gerson Solay, 28, carries his daughter, Bianca, as he and his family cross into Can...
Associated Press

US, Canada to end loophole that allows asylum-seekers to move between countries

President Joe Biden and Canadian Prime Minister Justin Trudeau on Friday announced a plan to close a loophole to an immigration agreement.
5 days ago
Expert skateboarder Di'Orr Greenwood, an artist born and raised in the Navajo Nation in Arizona and...
Associated Press

Indigenous skateboard art featured on new stamps unveiled at Phoenix skate park

The Postal Service unveiled the “Art of the Skateboard" stamps at a Phoenix skate park, featuring designs from Indigenous artists.
5 days ago
(Facebook Photo/City of San Luis, Arizona)...
Associated Press

San Luis authorities receive complaints about 911 calls going across border

Authorities in San Luis say they are receiving more complaints about 911 calls mistakenly going across the border.
11 days ago
(Pexels Photo)...
Associated Press

Daylight saving time begins in most of US this weekend

No time change is observed in Hawaii, most of Arizona, Puerto Rico, the U.S. Virgin Islands, American Samoa, Guam and the Northern Marianas.
19 days ago
(Photo: OCD & Anxiety Treatment Center)...
Sponsored Content by OCD & Anxiety Treatment Center

Here's what you need to know about OCD and where to find help

It's fair to say that most people know what obsessive-compulsive spectrum disorders generally are, but there's a lot more information than meets the eye about a mental health diagnosis that affects about one in every 100 adults in the United States.

Sponsored Articles

(Photo: OCD & Anxiety Treatment Center)...

Here’s what you need to know about OCD and where to find help

It's fair to say that most people know what obsessive-compulsive spectrum disorders generally are, but there's a lot more information than meets the eye about a mental health diagnosis that affects about one in every 100 adults in the United States.
...
Day & Night Air Conditioning, Heating and Plumbing

Company looking for oldest air conditioner and wants to reward homeowner with new one

Does your air conditioner make weird noises or a burning smell when it starts? If so, you may be due for an AC unit replacement.
(Desert Institute for Spine Care photo)...
DESERT INSTITUTE FOR SPINE CARE

Why DISC is world renowned for back and neck pain treatments

Fifty percent of Americans and 90% of people at least 50 years old have some level of degenerative disc disease.
Advisers tell Spirit shareholders to reject Frontier bid