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Spirit Airlines (SAVE) Delays Vote to Engage in Merger Talks

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Spirit Airlines (SAVE - Free Report) has delayed its shareholders’ meeting regarding the proposed merger agreement with Frontier Group Holdings (ULCC - Free Report) as it intends to continue talks with the latter and JetBlue Airways (JBLU - Free Report) . The meeting has been postponed to Jul 8 from Jun 30. Initially, the meeting was scheduled for Jun 10.

Both JetBlue and Frontier are aiming to acquire Spirit Airlines to expand their network and take advantage of the continued improvement in air-travel demand. The takeover battle comes at a time when the airline industry is struggling with staffing and aircraft shortages.

Frontier first proposed an offer to acquire Spirit Airlines in February. Back then, ULCC had proposed a $2.9-billion deal, by dint of which Spirit Airlines’ shareholders would have received $25.83 per share.


Recently, Frontier boosted its offer to include increased per-share cash consideration and higher reverse termination fees. ULCC increased its per-share cash consideration payable to Spirit Airlines’ shareholders by $2 to $4.13. This is in addition to 1.9126 Frontier shares that the company had agreed to pay previously. ULCC will also prepay $2.22 per share to SAVE’s shareholders as cash dividend upon approval of the transaction. The carrier also increased its reverse termination fee by $100 million to $350 million, payable to Spirit Airlines in case the deal fails to materialize due to antitrust concerns.

In April, JetBlue began its quest to acquire Spirit Airlines. Despite successively boosting proposals, JBLU has failed to get a favorable response from SAVE. The company’s offers have repeatedly been turned down, citing greater regulatory risks than the potential merger with Frontier.

Regarding Spirit Airlines’ decision to adjourn its special meeting, JetBlue said, “We compliment the Spirit Board for listening to their shareholders, who clearly were not supportive of the Frontier transaction, and adjourning the Special Meeting. We look forward to commencing a constructive and substantive dialogue with them.”

Each of the stocks mentioned above carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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