JetBlue Offers $3.6B Cash for Spirit

JetBlue Airways is offering $3.6 billion in an all-cash deal to buy Spirit Airlines, which would challenge the efforts by Frontier Airlines to do the same, The Wall Street Journal reported Tuesday (April 5).

The company offered to buy Spirit for $33 a share, calling it an unsolicited bid.

But JetBlue has competition – Frontier said in February it had a deal to buy Spirit for $2.9 billion in cash and stock. That deal, the report said, could transform the two discounters into the fifth-largest U.S. airline.

JetBlue says its proposal could be the better one, with its offer representing a 37% premium to the value implied from the Frontier one.

However, unlike Frontier’s proposal, under JetBlue’s, the Spirit shareholders would keep a 48.5% stake in the combined company.

If JetBlue wins, the WSJ report said this would thwart Frontier chair William Franke’s ambitions, who helped transform Spirit and Frontier into ultradiscounts, and has been looking to bring the two together into one company.

WSJ says JetBlue has been looking into deals before – it sought a bigger national footprint to compete with larger rivals. It tried to buy Virgin America, though that did not come to pass.

“When you see a proposal come through like the Frontier-Spirit merger, you recognize that if you want to do something, you have a finite period of time to act,” JetBlue Chief Executive Robin Hayes said in an interview Tuesday. “But the strategic thinking and the strategic value is obviously something we’ve been thinking about for a number of years.”

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