Advisers tell Spirit shareholders to reject Frontier bid

By AP News

Share:

In this article

  • Loading...
  • Want to see what you should be buying? Check out our top picks.

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 better.

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 better.

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.

In afternoon trading, shares of Spirit Airlines Inc. and Denver-based Frontier Group Holdings Inc. gained 2%, while JetBlue Airways Corp. was nearly unchanged.

Share:

In this article:

Companies:
JetBlue Airways

Author: AP News

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

Originally published by Associated Press Valuethemarkets.com, Digitonic Ltd (and our owners, directors, officers, managers, employees, affiliates, agents and assigns) are not responsible for the content or accuracy of this article. The information included in this article is based solely on information provided by the company or companies mentioned above.

Sign up for VTM Updates

Form submitted successfully!

Top Picks for Q2 2022

View More

Crypto Corner

Learn your NFTs from your BTCs