By Sam Boughedda
Investing.com -- Spirit Airlines Inc (NYSE:SAVE) has rejected the acquisition proposal from JetBlue Airways Corp (NASDAQ:JBLU), adding that it will instead continue with its Frontier Airlines merger.
Spirit shares fell 10.5%, while JetBlue shares fell 0.9% and Frontier shares fell 3.8%.
Spirit revealed that the unsolicited proposal from JetBlue does not constitute a "superior proposal" and has a “low probability” of receiving antitrust clearance because of its Northeast Alliance (NEA) with American Airlines (NASDAQ:AAL).
"We struggle to understand how JetBlue can believe DOJ, or a court, will be persuaded that JetBlue should be allowed to form an anticompetitive alliance that aligns its interests with a legacy carrier and then undertake an acquisition that will eliminate the largest ULCC carrier," Spirit said in a letter to JetBlue, using the acronym for ultra-low-cost carrier.
JetBlue revealed early Monday that it had enhanced its offer, which included a divestiture commitment.
However, Spirit added that they believe the proposal will unlikely resolve the DOJ's concerns about a combination of Spirit and JetBlue if the NEA continues in existence.
Sprit added that it asked JetBlue to ditch the NEA with American Airlines, but it was “unwilling” and would not consider other options.
"Given this substantial completion risk, we believe JetBlue's economic offer is illusory, and Spirit's board has not found it necessary to consider it," Spirit said.