© Reuters
By Geoffrey Smith
Investing.com — Spirit Airlines (NYSE:) stock rose over 4.2% in early trading on Monday after JetBlue (NASDAQ:) sweetened its hostile offer, hoping to break up its agreed deal with Frontier Group (NASDAQ:).
Under the revised terms, Spirit shareholders would receive $31.50 per share in cash, including $30 at the deal’s closing, and prepayment of $1.50 from a raised reverse break-up fee, which would be paid if Spirit shareholders vote to approve a deal. The move comes after JetBlue reduced the amount it was offering by around 10% to reflect changes in market valuations since the bidding war erupted in April.
Spirit shareholders are due to vote on Friday on the offer from, Frontier, which the discount airline’s board has already recommended.
JetBlue’s new offer still includes no commitment to unwind the Northeastern Alliance, its regional partnership with American Airlines (NASDAQ:). The prospect of strengthening NEA’s position in the regional market is seen as one of the reasons why antitrust regulators might strike down JetBlue’s plan, and Spirit’s board has repeatedly warned its shareholders of such a risk.
The bidding war comes at a time when air travel across the U.S. is enjoying a huge renaissance after the pandemic, but also at a time when high fuel costs are eating into profit margins, while the Democratic administration of President Joe Biden is openly chafing about the impact of sectoral concentration on competition and prices.
By 10:15 AM ET (1415 GMT), Spirit stock was up 4.3% while JetBlue stock was up 1.8% and Frontier stock was up 1.9%.
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