A merger of Spirit Airlines Inc. (NYSE: SAVE) and Frontier Group Holdings Inc (NASDAQ: ULCC) was set for a smooth take-off until JetBlue Airways Corp. (NASDAQ: JBLU) announced earlier this year its own bid to purchase Spirit.
Since then, the back-and-forth between shareholders has delayed the budget airline deal at least three times.
What Happened: Shareholders were set to vote on Friday, July 8, for the third time on a possible merger between Spirit and Frontier. But it was delayed at the last minute to allow both parties to continue negotiations.
See Also: Spirit Airlines Postpones Vote On Frontier Merger
The announcement from JetBlue completely derailed existing plans as now there are two corporations courting Spirit.
Frontier’s bid is a $2.6 billion cash-and-stock combination. JetBlue outbid Frontier with a $3.7 billion all-cash buy-out.
Management and shareholders seem to be more interested in Frontier’s deal, but since JetBlue is offering more money, discussions are ongoing.
The only caveat to the three-way bidding war is that Spirit was ready to accept and vote on Frontier's deal before JetBlue’s inital offering. If Miramar, Florida-based Spirit decides that JetBlue's offer is best for its company, then it must pay Frontier $94 million in break-up fees.
It seemed that Spirit’s management finally made up its mind and was going to accept Frontier’s merger until the company delayed a shareholders vote scheduled for today.
Why The Possible Merger/Buyout Matters: In the U.S., JetBlue, Spirit and Frontier are the main budget domestic airlines. If Spirit decides to merge with Denver-based Frontier, the airline conglomerate will dominate the budget airline sector.
Yet, as JetBlue continues to grow in its own right, it seems to be distancing itself from the somewhat infamous title of a “budget airline”. If the Long Island City, New York-based company wins the bidding war, and dissolves Spirit, then it will efficiently be the strongest and best-equipped budget airline in the nation.
For now, it seems that Spirit management is having a difficult time making a decision since the final vote continues to be delayed.
Photo: Courtesy of Thank You (22.5 Millions+) views on flickr
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Read at Benzinga