Investor-advisory firm backs latest Frontier bid for Spirit

By AP News

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NEW YORK (AP) — The decision by Frontier Airlines to sweeten its offer for Spirit Airlines paid dividends Friday when an investor-advisory firm recommended the deal to Spirit shareholders.

NEW YORK (AP) — The decision by Frontier Airlines to sweeten its offer for Spirit Airlines paid dividends Friday when an investor-advisory firm recommended the deal to Spirit shareholders.

Glass Lewis supported the deal after Frontier added a $250 million breakup fee to the February agreement between boards of both budget airlines.

The firm said a rival offer by JetBlue exceeds the current value of the Frontier deal “by a fairly wide margin,” but that JetBlue hasn't made a compelling case to override Spirit's argument that antitrust regulators would block a sale to JetBlue.

Glass Lewis said Frontier “likely has an easier path to closing" a deal than does JetBlue, and the firm said it was encouraged by the addition of a breakup fee to give Spirit shareholders more protection against the risk that regulators oppose the sale to Frontier.

JetBlue said Frontier and Spirit added the breakup fee only when it became clear that Spirit shareholders would vote down their merger. JetBlue included a $200 million fee to Spirit if regulators block its bid, which is worth more than $3 billion in cash.

Frontier’s offer was originally worth about $2.8 billion but has fallen in value as Frontier shares have slumped. However, it would let Spirit shareholders keep 48.5% of the combined company.

Before Frontier added the breakup fee to its stock and cash offer, advisory firm Institutional Shareholder Services Inc. recommended that Spirit shareholders vote down the Frontier bid and put pressure on Spirit's board to negotiate with JetBlue.

Shares of Spirit Airlines Inc., Frontier Group Holdings and JetBlue Airways Corp. fell more than 2% Friday, amid a broader market sell-off.

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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.

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