JetBlue goes hostile to buy Spirit Airlines: ‘it’s a head scratcher’

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JetBlue goes hostile to buy Spirit Airlines: ‘it’s a head scratcher’

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By:

Wajeeh Khan

on
May 16, 2022

JetBlue launched a hostile takeover bid for Spirit Airlines on Monday.

Cowen’s Aaron Glick reacted to the news on CNBC’s “Squawk Box”.

SAVE is up 10% this morning; JetBlue shares are down roughly 5.0%.

JetBlue Airways Corporation (NASDAQ: JBLU) is committed to buying Spirit Airlines Inc (NYSE: SAVE) and it won’t take no for an answer.

On Monday, it launched a hostile takeover bid for the ultra-low-cost air carrier, sending SAVE up roughly 10%.


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JetBlue announces a tender offer to buy Spirit Airlines

The news comes shortly after Spirit said it would rather execute its planned merger with Frontier Airlines as it rejected the $3.60 billion buyout proposal from JetBlue, saying it wasn’t sure the regulator will approve the JBLU deal.

Consequently, JetBlue now wants to buy the discount airline directly from shareholders at $30 a share. It also confirmed that the previous $33 a share proposal will be reinstated if Spirit shareholders vote against the merger agreement with Frontier Airlines.

If Spirit shareholders vote against the transaction with Frontier and compel the Spirit Board to negotiate with us in good faith, we’ll work towards a consensual transaction at $33 a share, subject to receiving the information to support it.

Analyst reacts to the hostile bid for Spirit Airlines

Discussing the development on CNBC’s “Squawk Box”, Cowen’s Aaron Glick said Spirit is right in believing the regulatory approval for the JBLU deal would be rather difficult to secure.

This offer is a head scratcher in this regulatory environment. The DOJ just pointed out that the section of the antitrust act that says mergers that create a monopoly or are anticompetitive has been underutilised by regulatory agencies. So, this one presents a lot of problems.

CEO Robin Hayes expects the acquisition to help JetBlue “supercharge” its growth. The stock is down 5.0% this morning.

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