By Alice Seeley
During Spirit Airlines board meeting on May 19, board members urged Spirit shareholders to reject JetBlue Airways’ hostile bid citing regulatory hurdles, calling the move “a cynical attempt to disrupt” its merger with Frontier Airlines. The company indicated that JetBlue’s $30 per share cash offer is not in the best interest of the shareholders and that shareholders should vote in favor of the lower-priced offer from Frontier Airlines on June 10.
“JetBlue’s proposals and offer are a cynical attempt to disrupt Spirit’s merger with Frontier, which JetBlue views as a competitive threat,” Spirit Airlines said in a statement.
Spirit Airlines board chairman, Mac Gardner, backed this decision, stating that “JetBlue’s tender offer has not addressed the core issue of the significant completion risk and insufficient protections for Spirit stockholders.”
Spirit laid out its concerns about JetBlue’s offer related to regulatory approval and antitrust matters in its board meeting. According to analysts, JetBlue’s Northeast Alliance with American Airlines is a significant regulatory challenge for any deal with Spirit. Although regulatory approval for Spirit’s deal with Frontier is also uncertain, it has a better chance of approval than JetBlue’s deal.
In response to the board meeting, JetBlue said that it is “no surprise that Spirit shareholders are getting more of the same from the Spirit Board,” accusing Spirit of conflicts of interest. JetBlue said Spirit’s board “continues to ignore the best interests of its shareholders by distorting the facts to distract from their flawed process and protect their inferior deal with Frontier.” As for concerns about regulatory approval, JetBlue reminded Spirit shareholders that approval of the Frontier Airlines deal is not assured.
JetBlue promised to increase its offer from $30 to $330 per share if Spirit Airlines started sharing more information with the company. It is very unlikely this will occur since Ted Christie, Spirit Airlines’ CEO, rejected this claim, saying that he and JetBlue’s CEO, Robin Hayes spoke over the previous month.
“I am frustrated by the commentary because to imply that our board didn’t go through its diligence is a misstatement, and quite frankly it’s insulting,” Christie said.