JetBlue Airways Corp. improved its offer for Spirit Airlines Inc., raising a break provision to $350 million and adding an upfront cash payment just days before shareholders vote on a pending takeover deal with Frontier Group Holdings Inc.
The revised offer increases JetBlue’s reverse break fee by $150 million and provides for about $164 million to be payable as a cash dividend “soon after” a vote approving a combination of the carriers, the airline said in a statement. statement on Monday. The update comes after Frontier sweetened its own deal by adding a key $250 million fee payable to Spirit if their deal breaks down for antitrust reasons.
JetBlue is aiming to build support from Spirit shareholders for its higher all-cash offer ahead of the June 10 vote. He needs them to vote against Frontier’s stock and cash deal, originally valued at $2.9 billion, to preserve his best chance of injecting rapid growth that will help him compete with the big guys. American carriers. Spirit rejected JetBlue’s initial $3.6 billion offer, prompting a hostile $3.3 billion takeover bid.
Spirit shareholders face conflicting recommendations from leading shareholder advisory firms. Institutional Shareholder Services Inc. found JetBlue’s all-cash offer to be superior from a financial standpoint and that both offers presented inherent risks with respect to federal antitrust reviews. A rejection by Spirit’s investors would signal their board to resume talks with JetBlue, he said.
Voting advisory firm Glass Lewis & Co. later recommended Frontier’s proposal, calling it “the best available and most actionable alternative.”
Shares of Spirit jumped 7.5% premarket to $22.30. JetBlue fell 0.2% to $10.45.