Advisers tell Spirit shareholders to reject Frontier bid
NEW York — A firm that advises investors in proxy voting stated Tuesday that Spirit Airlines shareholders should reject Frontier Airlines’ bid for Spirit. They believe that JetBlue’s offer 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. The firm stated that both bids have regulatory risks, but only the JetBlue offer has a $200million breakup fee in the event regulators reject it.
ISS stated that Spirit shareholders should reject Frontier’s offer to signal to its board to negotiate with JetBlue and possibly get a higher 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 it was announced in February. The offer’s value has sunk 26% to $19. ISS stated that 19 per share has fallen since then due to a decrease in Frontier shares’ value.
JetBlue offered $33 per Share, or $3.6 Billion, in April. When that was rejected, it launched a tender offering at $30 per Share, or $3.2 Billion.
JetBlue, based in New York, wants to acquire 100% from Spirit. The Frontier offer would allow Spirit shareholders to keep 48.5%.
The Spirit board stated that “more patient shareholders would reap greater rewards by remaining invested in a combined Frontier/Spirit could be proven out over time.” It said that JetBlue’s sale would provide Spirit shareholders with a substantial premium, while airline stocks are falling, and allow those who are optimistic about the sector to reinvest the premium.
Spirit CEO Ted Christie stated that the company believes the Frontier deal is better than the one he has been offered. He stated that JetBlue had admitted to Spirit that it was facing a lawsuit from the U.S. Justice Department seeking to stop a merger with Spirit. Robin Hayes, CEO of “
JetBlue, stated that the ISS report showed that the Spirit board of directors must negotiate with JetBlue — “this is good faith.” “
Frontier declined comment.
Shares in Spirit Airlines Inc. closed higher by 2%, Denver-based Frontier Group Holdings Inc. gained 33%, and JetBlue Airways Corp. fell by 1%.
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