Spirit to engage with JetBlue over $3.6 billion takeover bid

Spirit Airlines Inc. will engage in talks with JetBlue Airways Corp. over its $3.6 billion cash takeover bid that’s threatening to disrupt a pending combination between Spirit and rival deep discounter Frontier Group Holdings Inc.

JetBlue’s offer could lead to a superior proposal, Spirit said in a statement late Thursday in the U.S. after assessing the bid with financial and legal advisers. JetBlue’s unsolicited offer topped Frontier’s $2.9 billion cash-and-stock purchase deal, which Spirit agreed to two months ago. 

Further details on the timing of the JetBlue and Spirit discussions weren’t disclosed. Spirit’s board hasn’t changed its recommendation that shareholders adopt the merger agreement with Frontier, and there can be no assurance talks with New York-based JetBlue will result in a transaction, the statement said.

JetBlue said in a separate statement that it was pleased Spirit’s board recognized the “compelling value for all stakeholders” of its takeover proposal. 

Read more: JetBlue’s Spirit Bid Is Driven by Hunger for ‘Stealth’ Asset

Any purchase would provide a burst of growth that JetBlue can’t otherwise attain, and create a secure supply of new Airbus SE planes for the future. But market overlap in the eastern parts of the U.S. could raise antitrust questions at the same time JetBlue is battling a federal lawsuit over a business alliance with American Airlines Group Inc. 

JetBlue’s costs would also necessarily rise as it converts Spirit’s bare-bones business and aircraft to its own corporate model.

Meanwhile, under the pending agreement, holders of Denver-based Frontier would own 51.5% of the combined company and get to name seven of the 12 directors. The deal includes a $94.2 million breakup fee.

Goldman Sachs Group Inc. is serving as JetBlue’s financial adviser while Shearman & Sterling LLP is the legal adviser. Barclays Plc and Morgan Stanley are working with Spirit, along with Debevoise & Plimpton LLP.