Spirit Airlines Inc. delayed a shareholder vote on its proposed merger with Frontier Group Holdings Inc. less than 24 hours before it was scheduled, saying management needs more time for talks with its favored partner and rival suitor JetBlue Airways Corp.
Spirit, which rescheduled the meeting for July 8, will continue soliciting shareholder proxies for the ballot, according to a statement late Wednesday. The decision to delay came a day after the carrier rejected an improved $3.7 billion all-cash offer from JetBlue, the airline’s fifth try at wooing Spirit.
Despite advocating for the Frontier merger for months, even after JetBlue sweetened its terms, Spirit’s board said it needed more time to sway shareholders, a tacit admission that it’s not confident the deal will get approved. Spirit delayed the shareholder vote once before, earlier in June. Frontier’s stock-and-cash offer was valued at $2.6 billion as of last week.
“My guess is this means they don’t have everything in place for tomorrow,” said George Ferguson, a Bloomberg Intelligence aviation analyst. “To me, it sounds like they don’t have the votes.”
Shares of Spirit were up 1.9% to $22.84 in extended trading. Frontier gained 1.8% to $9.68, while JetBlue was fractionally lower at $8.90.
Both suitors are counting on a Spirit acquisition to provide a quick infusion of growth as domestic leisure travel surges. A Frontier-Spirit combination would create the nation’s largest deep-discount airline, placing it just behind the top four US carriers based on domestic passenger traffic. JetBlue has said Spirit would “turbocharge” its expansion and make it a better competitor to bigger rivals.
“It’s clear that Spirit shareholders have now handed the Spirit board an undeniable mandate to reach an agreement with JetBlue,” JetBlue said in a statement. “We urge the Spirit board to listen to its shareholders and accept our superior proposal without further delay.”
Frontier didn’t immediately comment.
“Stockholders who have not already voted, or wish to change their vote, are strongly encouraged to submit their proxies as soon as possible,” Spirit said. No voting will occur at the Thursday meeting, which will be opened and then immediately adjourned, it said.
Spirit and JetBlue spent the day before the scheduled vote engaging in a media blitz that ratcheted up the contentious nature of the takeover fight. JetBlue denounced Spirit’s “wildly optimistic and unrealistic claims” about the value of combined Spirit-Frontier shares years down the road, while Spirit Chief Executive Officer Ted Christie said JetBlue had turned to “scurrilous rhetoric” instead of substantially improving its offer to address concerns over whether it could pass regulatory muster.
JetBlue’s latest offer includes an accelerated prepayment of $2.50 a share, structured as a cash dividend to Spirit shareholders after approval of the terms. That’s up from $1.50 in a prior offer. JetBlue also increased its breakup fee to $400 million from $350 million, to be paid to Spirit if antitrust regulators block the combination.
The offer also includes a so-called ticking fee that would pay shareholders a small amount monthly during the regulatory review, possibly boosting the overall value of the offer to $34.15 a share. JetBlue’s last bid was $33.50.
Frontier on June 24 boosted the cash portion of its bid to $4.13 a share—up about $2 from its original bid—along with 1.9126 share of its stock for each of Spirit’s. Spirit investors would receive $2.22 a share as a cash dividend once the transaction is approved. Frontier also raised its proposed breakup fee to $350 million.
Spirit’s rejection of JetBlue’s offer has centered on its belief that the combination will be blocked by Biden administration antitrust regulators who have said they will take a hard line on further consolidation in some industries, including airlines.