- Frontier is proposing Spirit a $250 million reverse breakup fee.
- JetBlue Airways is attempting to purchase Spirit and has launched an aggressive takeover bid.
- JetBlue’s bid included a reverse breakup fee of $200 million.
Frontier Airlines’ parent company said on Thursday that if regulators do not approve the planned merger of the two discount carriers for antitrust reasons, it will pay a $250 million reverse breakup fee to Spirit Airlines, an effort aimed at convincing investors to approve the deal next week as rival JetBlue Airways tries to buy Spirit outright.
“The combination of a higher reverse termination fee and a much greater likelihood to close in a Frontier merger provides substantially more regulatory protection for Spirit stockholders than the transaction proposed by JetBlue,” Mac Gardner, Spirit’s chairman said in a news release.
Based in New York In April, JetBlue proposed $33 per share, or $3.6 billion in cash, for Spirit, above the $2.9 billion cash-and-stock deal announced by Spirit and Frontier in February.
Spirit’s board of directors rejected JetBlue’s advances, and JetBlue launched a tender offer of $30 per share last month, urging Spirit shareholders to vote against the merger.
Spirit stated that a partnership with JetBlue would most likely be rejected by regulators. If the merger is not approved by regulators, JetBlue will pay a $200 million reverse breakup fee.
The proxy advisory firm Institutional Shareholder Services advised Spirit shareholders on Tuesday to vote against the Frontier transaction, citing worries over the lack of a reverse termination fee.
The shareholder meeting for Spirit is scheduled for June 10.
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