Spirit Shareholders to Vote on JetBlue's Buyout Proposal
Spirit Airlines’ shareholders will vote on whether to approve JetBlue Airways’ $3.8 billion bid to purchase the low-cost carrier on 19 October, according to Spirit’s 12 September filing with the US Securities and Exchange Commission (SEC).
Approved by Spirit’s board of directors on 28 July, the deal calls for New York-based JetBlue to buy Spirit – based in Miramar, Florida – by the first half of 2024.
If Spirit’s shareholders approve the transaction, it would mark the end of a saga in which Spirit scheduled and delayed four previous shareholder meetings to vote on a deal with Denver-based ultra-low-cost peer Frontier Airlines.
But even after shareholder approval, the deal would still need to be approved by federal antitrust regulators. The transaction would eliminate a low-cost carrier from the market and position the JetBlue-Spirit combination as the USA’s fifth-largest airline behind American Airlines, Delta Air Lines, Southwest Airlines and United Airlines, JetBlue chief executive Robin Hayes said in July.
Frontier made its first offer to acquire Spirit in February, with JetBlue submitting an unsolicited counteroffer in April. Frontier intended to dramatically expand its model as an ultra-low-cost airline, and it long appeared to hold the inside track on the purchase. Over the course of several months, Spirit chief executive Ted Christie repeatedly encouraged shareholders to approve the Frontier bid, saying that a Frontier-Spirit combination would have an easier path to antitrust approval than a combination with JetBlue.
Spirit pulled the plug on the Frontier deal on 27 July, after it was clear it did not have the votes in favour of the tie-up. The carrier instead favoured JetBlue’s fourth revision on its takeover offer. Christie said his airline was “thrilled to unite with JetBlue”, adding that the merger could “create the most compelling national low-fare challenger to the dominant US carriers”.
JetBlue is expected to pay for the acquisition in part through debt financing; the final price tag will vary based on whether JetBlue pays $33.50 per share for Spirit or $34.15 per share, depending on the timing of the deal’s close.
Acquiring Spirit “turbo-charges our strategic growth,” Hayes has said, and positions the airline to be a unique “solution to the lack of competition in the US airline industry and the continued dominance of the Big Four”.
During the 19 October meeting, Spirit shareholders will also consider a compensation proposal for Spirit’s executive officers, including Christie, who under the agreement would receive either a “partial retention award” or a termination package.