NEW YORK (AP) – A firm advising investors on proxy voting said Tuesday that Spirit Airlines shareholders should oppose Frontier Airlines’ offer to buy Spirit, saying JetBlue’s competitive offer is better.
Institutional Shareholder Services Inc. acknowledged that the Spirit Board may be right in believing that Frontier’s proposal is more likely to gain antitrust approval. However, according to the firm, both bids carry regulatory risks, but JetBlue’s offer alone includes a $ 200 million fee for the gap in the event that regulators reject it.
The ISS said Spirit shareholders should reject Frontier’s offer to signal to its board about further talks with JetBlue, possibly to get a higher breakout fee.
Shareholders in Miramar, Florida, Spirit are scheduled to vote June 10 on whether to approve Frontier’s share and cash offer, which was valued at $ 25.83 per share or $ 2.8 billion when it was announced in February. . Since then, the offer price has fallen 26% to $ 19.19 per share due to falling Frontier stock prices, according to the ISS.
In April, JetBlue made a cash offer of $ 33 per share, or $ 3.6 billion, and when it was rejected, it launched a $ 30 per share bid, or $ 3.2 billion.
While New York-based JetBlue wants to acquire 100% Spirit, Frontier’s offer will allow Spirit shareholders to retain 48.5% of the new merged airline.
The opinion of the Spirit Board, “that more patient shareholders will benefit more by staying to invest in a combined Frontier / Spirit, may eventually turn out,” the ISS acknowledged. But it says the sale of JetBlue will give Spirit shareholders a significant premium, while airline shares are declining, and will allow those who are optimistic about the sector to reinvest the premium.
At the auction in the afternoon shares of Spirit Airlines Inc. and Frontier Group Holdings Inc. from Denver grew 2%, and JetBlue Airways Corp. almost unchanged.