Spirit Airlines’ (NYSE:SAVE) board rejected JetBlue Airways Corporation’s (NASDAQ:JBLU) overtures for the third time on Thursday.
Spirit Airlines executives are emphatically rejecting JetBlue’s unsolicited offer to takeover the low-cost carrier after receiving two prior offers in Apriland May. The airline’s board urged shareholders to reject JetBlue’s (JBLU) and instead vote for the planned merger with Frontier Air Group (ULCC).
"JetBlue's tender offer has not addressed the core issue of the significant completion risk and insufficient protections for Spirit stockholders," Board Chairman Mac Gardner said. "Based on our own research and the advice of antitrust and economic experts, our view is that the proposed combination of JetBlue and Spirit lacks any realistic likelihood of obtaining regulatory approval, while our company faces a long and bleak limbo period as we await resolution.”
He added that clauses related to reverse breakup fees and potential business disruptions during a regulatory review make the deal a non-starter.
The release also elaborates on concerns related to the Northeast Alliance with American Airlines (AAL) that is currently under review by the Department of Justice. The lingering regulatory scrutiny is a linchpin to management’s rejection of the proposed deal, suggesting management would not consider accepting the deal at almost any price.
Elsewhere, the company specifically rejected accusations levied by JetBlue(JBLU) CEO Robin Hayes about a lack of consideration of the offer and undue influence from major shareholders. In fact, Spirit even more explicitly indicated its belief that the JetBlue (JBLU) offer is meant merely as a distraction rather than a serious bid.
“Spirit believes JetBlue's proposals and offer are a cynical attempt to disrupt Spirit's merger with Frontier, which JetBlue views as a competitive threat,” Spirit said on Thursday morning. “JetBlue waited over seven weeks after the announcement of the Frontier merger agreement to submit a proposal to acquire Spirit, and JetBlue chose to launch the Offer shortly after the merger proxy statement for the Frontier merger was mailed to Spirit stockholders. That timing does not seem coincidental.”
The release adds that JetBlue CEO Robin Hayes and Spirit CEO Ted Christie are quite familiar and have never discussed any combination of businesses. The fact this has never been a topic of discussion was cited as evidence that the series of offers are merely a ruse.
Finally, Spirit Airlines’ (SAVE) statements question the value of the deal for JetBlue even if it were to accept.
“JetBlue's stock price has repeatedly fallen whenever JetBlue makes public comments regarding a proposed transaction with Spirit,” the press release points out. “JetBlue stockholders obviously agree that their company's quixotic offer for Spirit is a dead end, posing substantial risks to their own business.”
Judging by the board’s reaction, JetBlue’s (JBLU)$33 bid for the air carrier is also a dead end.