JetBlue Airways (NASDAQ:JBLU) on Monday commenced a hostile all-cash takeover bid for Spirit Airlines (NYSE:SAVE), two weeks after the discount carrier rejected an offer from the larger rival.
JetBlue, which in early April offered $33 per share, is locked in a takeover battle for Spirit with Frontier Group Holdings and has argued a deal will help better compete with the “Big Four” U.S. airlines that control nearly 80% of the passenger market.
In a letter to Spirit shareholders on Monday, JetBlue offered $30 per share and said it was ready to “negotiate in good faith a consensual transaction at $33, subject to receiving necessary diligence.”
Spirit rejected the earlier offer, saying it had a low likelihood of winning approval from regulators.
JetBlue said on Monday it had filed a “Vote No” proxy statement urging Spirit shareholders to vote against the planned merger with Frontier, which cash and stock for each share of the discount carrier that was valued on Friday at $18.81 a share.
JetBlue, the sixth largest U.S. passenger carrier, would operate Spirit under the JetBlue brand and does not think any divestitures are needed, but promised a $200 million reverse break-up fee, or $1.80 per Spirit share, if the deal did not go through for antitrust reasons.
JBLU shares dropped 19 cents, or 1.9%, to $9.87, while those for SAVE gained $1.26, or 7.4%, to $18.24 first thing Monday.
