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JetBlue ups offer for Spirit Airlines ahead of shareholder vote

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LaGuardia International Airport Terminal A for JetBlue and Spirit Airlines in Recent York.

Leslie Josephs | CNBC

JetBlue Airways again increased its offer for Spirit Airlines with a shareholder vote for the discounter’s deal to merge with Frontier Airlines just days away.

Frontier sweetened its offer on Friday. Spirit’s CEO Ted Christie on Tuesday reiterated the airline’s board still found the deal to mix with fellow budget airline Frontier a superior option than going with JetBlue.

Spirit shareholders are set to vote on the Frontier cash-and-stock deal on Thursday; Spirit postponed the vote earlier this month to proceed talks with each airlines.

Either combination would create the fifth-largest U.S. carrier. The heated bidding war underscores how each JetBlue and Frontier view Spirit as key to their future growth plans at a time when planes and pilots are in brief supply.

Spirit had argued that it didn’t think a JetBlue deal would pass muster with regulators, particularly due to its alliance with American Airlines within the Northeast.

“After the Spirit Board’s failure to acknowledge our decisively superior offer, we have discussed our offer directly with Spirit shareholders and are actually modifying our proposal in response to shareholders’ expressed interest, to incorporate a monthly payment for shareholders, with the understanding of a big money premium at closing,” JetBlue’s CEO Robin Hayes said in an announcement.

JetBlue’s latest offer raises the reverse break-up fee to $400 million from $350 million if regulators don’t approve the deal and features a dividend to Spirit shareholders of $2.50 a share, up from a previous offer of $1.50.

It also features a “ticking fee,” which might pay shareholders 10 cents a share every month from January 2023 through the completion or termination of the deal.

Frontier on Tuesday attacked the brand new JetBlue offer and dismissed JetBlue’s claims that its acquisition of Spirit would result in lower airfares.

“JetBlue isn’t telling you the reality,” Frontier said in an announcement. “A Spirit acquisition by JetBlue would result in a dead end—a undeniable fact that no sum of money, bluster, or misdirection will change. And the one value Spirit stockholders could be more likely to receive from JetBlue’s proposal is the reverse termination fee, because JetBlue’s proposal lacks any realistic likelihood of obtaining regulatory approval.”

JetBlue’s shares gave up earlier gains to finish down 0.3% in a broader market swoon on Tuesday. Spirit’s stock closed up greater than 1% and Frontier’s added 0.6% Tuesday. Shares of those carriers fell sharply Monday.

Frontier on Friday increased the money portion of its bid by $2 a share to $4.13 and raised its reverse break-up fee to $350 million, matching JetBlue’s earlier offer.

“We expect we’ve got probably the most compelling offer for shareholders,” Frontier CEO Barry Biffle said in an interview earlier Monday. Biffle spoke from Recent York, where he’s planning to fulfill with Spirit shareholders this week ahead of the vote on Thursday.

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