Spirit Airlines' board of directors has rejected a revised buyout offer from JetBlue Airways and is throwing its full weight behind a merger with Frontier.
In a statement Monday, Spirit's board said it "unanimously determined" that JetBlue's enhanced proposal was "not superior" to its deal with Frontier and "not reasonably capable of being consummated."
Spirit's Chairman of the Board Mac Gardner and CEO Edward M. Christie, III wrote in a letter to JetBlue's CEO:
We believe a combination of JetBlue and Spirit has a low probability of receiving antitrust clearance so long as JetBlue's Northeast Alliance (NEA) with American Airlines remains in existence ... As you know, Spirit and many other airline and air travel constituencies have publicly opposed the NEA on grounds that it is anticompetitive. We struggle to understand how JetBlue can believe (Department of Justice), or a court, will be persuaded that JetBlue should be allowed to form an anticompetitive alliance that aligns its interests with a legacy carrier and then undertake an acquisition that will eliminate the largest (ultra low-cost) carrier.
Additionally, in a press release, Gardner said JetBlue's offer posed an "unacceptable level of closing risk that would be assumed by Spirit stockholders."
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JetBlue had acknowledged the concerns.
"We've added financial protections for Spirit and their shareholders in the event the deal isn't approved by the government or in court," JetBlue's CEO Robin Hayes said in an internal letter to employees also dated Monday.
"Spirit shareholders would be better off with the certainty of our substantial cash premium, regulatory commitments, and reverse break-up fee protection," Hayes added in a press release. "The Frontier transaction has a similar regulatory profile to ours but offers no divestiture commitment and no reverse break-up fee, while the uncertain value of Frontier’s stock exposes Spirit shareholders to significant risk."
That apparently wasn't enough to assuage Spirit's board, however, which is encouraging shareholders to adopt the Frontier merger agreement, saying it "represents the best opportunity to maximize value."
Frontier Airlines has not publicly commented on the latest developmens
Spirit and Frontier announced plans to merge in early February. Under the deal's terms, Spirit stockholders would receive 1.9126 shares of Frontier and $2.13 in cash for each existing Spirit share they own. The airlines are aiming to close the deal in the second half of this year, pending approval by both Spirit investors and regulators.
This article originally appeared on USA TODAY: Spirit Airlines rejects JetBlue offer, clears way for Frontier merger