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In February, Frontier Airlines announced a planned acquisition of Spirit Airlines for $ 2.9 billion. JetBlue Airways unveiled its rival $ 3.6 billion cash offer in early April, sparking a bidding war for Spirit between the two airlines that has continued ever since. Any potential merged airline combination would become the fifth largest in the United States. Still, it looks like the war is finally over with Frontier and Spirit reaching pleasant conditions.
The biggest obstacle to Frontier’s acquisition of Spirit Airlines was not any offer proposed by JetBlue, but Spirit’s own shareholders. In early June, Institutional Shareholder Services, a voting advisory firm, asked shareholders not to vote in favor of the Frontier deal. Spirit then postponed the acquisition vote until June 30. Florida-based airline management said it delayed voting due to lack of shareholder support, but continued to seek a better deal with Frontier as a first option.
Today, Institutional Shareholder Services has reversed its position and recommends voting on a new deal with Frontier Airlines. ISS stated: “The best services to shareholders are taken to the agreement that offers the best combination of long-term value and compensation in the event of regulatory rejection. Ultimately, support for the merger with Frontier is guaranteed in the revised terms.” . Frontier increased its purchase offer by $ 2 per share ($ 4.13 per share), as did JetBlue’s increase. Frontier also increased its reverse termination rate on Spirit to $ 350 million, an increase of $ 100 million.
JetBlue’s current $ 3.7 billion offer may seem appealing, but the New York-based airline has done little to alleviate Spirit’s concerns that government regulators don’t actually approve the deal. JetBlue is currently under antitrust investigation for its strategic alliance with American Airlines. When Spirit asked him to end the controversial partnership for new negotiations, JetBlue refused. This rejected lawsuit indicated somewhat that JetBlue simply wanted to disrupt the creation of a direct rival to the industry.