Spirit Airlines Again Rejects Frontier Acquisition Offer
Spirit Airlines has once again rejected an acquisition offer from Frontier Group, valued at approximately $2.16 billion.
Details of Frontier’s Offer
Frontier’s proposal consisted of granting Spirit shareholders $400 million in debt and a 19% stake in Frontier. In addition, it eliminated the prerequisite that Spirit complete a $350 million equity rights issue and use the proceeds to pay off its debtor-in-possession credit facility. In addition, the offer included a waiver of a $35 million termination fee approved by the bankruptcy court.
Reasons for Spirit Airlines’ Rejection
Despite these modifications to the offer, Spirit Airlines determined that the revised proposal did not address certain previously identified risks and material issues. The Florida-based airline, which filed for bankruptcy last year and expects to complete its restructuring during the first quarter of this year, considered that Frontier’s offer was not sufficiently attractive compared to its reorganization strategy.
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Spirit’s Counteroffer and Frontier’s Rejection
In response, Spirit Airlines submitted a counteroffer proposing that its shareholders receive $600 million in debt and $1.185 billion in equity. However, Frontier rejected it, leading to a stalemate in negotiations.
Background of Negotiations Between Spirit and Frontier
Discussions about a potential merger between the two airlines have been ongoing since at least 2022, well before Spirit filed for bankruptcy due to prolonged financial losses and a heavy debt burden. Amid these negotiations, JetBlue Airways intervened with a higher offer and managed to prevail in the battle to acquire Spirit. However, this deal was ultimately canceled after a U.S. judge blocked it due to antitrust concerns.
Despite the setback, Frontier revived its interest in acquiring Spirit earlier this year. However, the Florida-based low-cost airline had already considered that Frontier’s new offer was inferior to the one discussed in 2022 and sought assurances that the deal would close without Frontier backing out.
Spirit’s decision to reject the offer reinforces its confidence in the ongoing restructuring plan. Now, the airline’s future will depend on its ability to successfully emerge from the bankruptcy process and improve its position in the ultra-low-cost market in the United States.
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