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Frontier offers $250M reverse breakup fee if Spirit merger is blocked

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A Frontier Airlines plane near a Spirit Airlines plane on the Fort Lauderdale-Hollywood International Airport on May 16, 2022 in Fort Lauderdale, Florida.

Joe Raedle | Getty Images

Frontier Airlines’ parent company on Thursday said it will pay a $250 million reverse breakup fee to Spirit Airlines if regulators don’t approve the planned combination of the 2 discount carriers for antitrust reasons, an effort geared toward convincing investors to approve the deal next week as rival JetBlue Airways tries to purchase Spirit outright.

“The mixture of a better reverse termination fee and a much greater likelihood to shut 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.

Latest York-based JetBlue offered $33 a share, or $3.6 billion money for Spirit, in April, above the $2.9 billion cash-and-stock deal that Spirit and Frontier announced in February.

Spirit’s board rejected JetBlue’s advances, and JetBlue last month made a young offer of $30 a share and has urged Spirit shareholders to vote against the deal.

Spirit said a cope with JetBlue would not likely be approved by regulators. JetBlue’s offer features a $200 million reverse breakup fee if regulators don’t approve the acquisition.

On Tuesday, proxy advisory firm Institutional Shareholder Services advised Spirit shareholders to vote against the Frontier deal, raising concerns in regards to the lack of a reverse termination fee.

“Spirit’s Board only went back to Frontier under pressure, when it became increasingly clear their shareholders would decisively reject the Spirit Board’s flawed process and Frontier’s inferior transaction,” JetBlue said in a statement Thursday. 

“The addition of a reverse termination fee within the face of a possible defeat is just an acknowledgement that the regulatory profiles and timelines of each deals are indeed similar,” it added.

Spirit’s shareholder meeting is ready for June 10.

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