Ultra-low cost carrier Spirit Airlines (NYSE: SAVE) on Monday rejected JetBlue Airways’ (NASDAQ:JBLU) $33-per-share takeover offer, saying it had a low likelihood of winning approval from government regulators.
JetBlue responded by enhancing its offer – but not its $33 per share price – and promising a $200 million reverse break-up fee – or $1.80 per Spirit share – if the deal does not go through for antitrust reasons.
JetBlue’s offer is significantly higher than the current $22.44 per-share value of the cash and stock bid from Frontier made in February.
Frontier and JetBlue are in a battle for Spirit to better compete with legacy carriers, or the “big four” airlines that control nearly 80% of the U.S. passenger market.
JetBlue said Monday that it would offer a remedy package to address regulatory concerns “that includes the divestiture of all Spirit assets in New York and Boston so that JetBlue does not increase its presence in the airports covered by the NEA. The package would also include gates and assets at other airports, including Fort Lauderdale.”
Spirit said it believes the Justice Department and a court “will be very concerned that a higher-cost/higher fare airline would be eliminating a lower-cost/lower fare airline in a combination that would remove about half of the ULCC (ultra low cost carrier) capacity in the United States.”
Spirit said in its April 25 response to JetBlue that it proposed “requiring JetBlue to take any action required to obtain regulatory clearance, which specifically included abandoning the NEA at closing.”
Spirit stock dipped $2.08, or 8.8%, to $21.53. first thing Monday, while JBLU lost 14 cents, or 1.2%, to $10.88.