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Spirit (SAVE) Stock Up 13.49% in Monday's Trading: Here's Why

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Shares of Spirit Airlines (SAVE - Free Report) gained more than 13% in Monday May 16’s trading as the bidding war for this Miramar, FL-based ultra low-cost carrier intensified. The airline stock closed the day at $19.27 a share, up 13.49% from Friday May 13’s closing price.

The upsurge followed JetBlue Airways’ (JBLU - Free Report) continued interest in acquiring Spirit Airlines, despite being rebuffed by the latter a few days ago. We remind investors that the currently Zacks Rank #4 (Sell) SAVE’s management had cited regulatory risks while refusing the offer. Instead, it then decided to stick to the $2.9-billion worth takeover offer ($6.6 billion after considering the assumption of net debt and operating lease liabilities), put forward by Frontier Group Holdings (ULCC - Free Report) , the parent company of Frontier Airlines, in February.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

After consulting its legal experts, Spirit Airlines’ board of directors decided that the unsolicited offer worth of $33 per share in cash along with a number of deal sweeteners, received from JetBlue, is by no means a 'Superior Proposal' as defined in SAVE's merger agreement with Frontier.

Despite the rejection, JetBlue is yet to give up its hope of buying the airline. As evidence, it launched a hostile all-cash unsolicited tender offer only yesterday to acquire all the outstanding shares of SAVE's common stock.

In a letter addressed directly to the Spirit Airlines shareholders, JetBlue tweaked its purchase price to $30 per share (without interest and less any required withholding taxes). The lowered offer price represented a 60% premium (as of May 13, 2022) to the value of the Frontier transaction. JBLU also urged SAVE’s shareholders to vote against the Spirit Airlines/Frontier merger at the upcoming meeting, currently scheduled on Jun 10.

Per JetBlue, SAVE’s board of directors was unwilling to share the same necessary diligence information that it had shared with Frontier. Moreover, per the press release, JetBlue management was ready to negotiate in good faith a consensual transaction at $33, subject to receiving necessary diligence.

However, Spirit Airlines’ board of directors advised its shareholders against taking any rash action at the moment and decided that the board will first carefully review JetBlue’s tender offer. SAVE intends to convey the board's decision to its stakeholders within 10 business days.

Stay tuned for more updates on this hot topic in the airline space.


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JetBlue Airways Corporation (JBLU) - free report >>

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