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Thursday, February 2, 2023

Frontier-Spirit Merger Proposal Adds Reverse Termination Fee, While JetBlue Continues Fight

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An amended merger proposal between Frontier Airlines and Spirit Airlines now features a $250 million reverse termination payment, whereas JetBlue nonetheless urges the Florida airline’s shareholders to reject the deal.

With stress mounting from JetBlue, Frontier Airlines is sweetening their merger proposal with Spirit Airlines.

 

In a press launch, the Denver-based airline introduced they’d pay a $250 million reverse termination payment to Spirit Airlines if their merger is damaged up for antitrust causes.

 

Reverse Termination Fee Added as a Stockholder Protection

According to Spirit executives, whereas the merger proposal is being properly obtained by the corporate’s shareholders, their largest concern is defending their worth within the occasion the merger doesn’t undergo. Because the 2 carriers would type America’s largest ultra-low-cost-carrier, the deal might probably appeal to elevated scrutiny from each the U.S. Department of Justice and Department of Transportation.

 

“Since announcing our transaction with Frontier, we have had extensive constructive conversations with our stockholders, who have expressed support for the strategic rationale of our combination but a desire for additional stockholder protections,” Ted Christie, president and chief govt of Spirit, mentioned in a press launch. “After discussing this feedback with the Frontier Board and management team, we have agreed to amend the merger agreement.”

 

The airways say the addition of a reverse termination payment is just not a sign that the deal might not go antitrust assessment. Instead, leaders at each corporations say the settlement change is reflective of their “conviction that regulators will find this combination to be pro-competitive.”

 

While Frontier and Spirit proceed to rally shareholders to approve the merger settlement, JetBlue remains to be campaigning for his or her proposal. In a press release responding to Frontier including a reverse termination payment, the New York-based airline is accusing Spirit of not evaluating their supply in good religion.

 

“The addition of a reverse termination fee in the face of a likely defeat is simply an acknowledgement that the regulatory profiles and timelines of both deals are indeed similar,” the JetBlue assertion reads. “Spirit had already admitted that its own prior unreasonably optimistic projections of receiving approval this year were in fact not accurate. Experts agree both transactions will receive the same level of scrutiny.”

 

Independent Proxy Firms Weigh in on Proposed Merger

The latest developments come as two impartial proxy advisory companies are providing cut up opinions. Independent advisor ISS got here out towards the Frontier-Spirit deal, calling the JetBlue alternative “superior from a financial standpoint. Glass, Lewis & Co. is backing the Frontier-Spirit merger, saying the equity-based deal gives shareholders “the option to participate in the potential future upside of the combined company, including the anticipated post-COVID recovery in the airline travel industry.”

Source: www.flyertalk.com

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