Spirit Airline is calling for a shareholder vote on June 10 for the airline’s proposed merger with Frontier Airlines. The airline is recommending that shareholders vote for the merger, according to a filing with the U.S. Securities and Exchange Commission.
The move comes shortly after Spirit’s board rejected an unsolicited merger bid from JetBlue Airways. Spirit CEO Ted Christie last week defended the board’s decision to reject JetBlue’s higher bid, arguing that the merger would not survive regulatory scrutiny. The U.S. Justice Department last year sued to block JetBlue’s alliance with American Airlines on the grounds that it reduced competition in the Northeast U.S.
JetBlue offered $33 per Spirit share in its all-cash bid, which valued the deal at $3.6 billion. Christie last week said Frontier’s $2.6 billion cash-and-stock offer ultimately would be a better value for shareholders and will grow more attractive as the airline industry recovers.
Moreover, Spirit argued that the deal with Frontier would create a national ultra-low-cost carrier and increase competition with the major airlines. A merger with JetBlue, on the other hand, would eliminate Spirit as a low-cost competitor on many routes and would be unlikely to survive regulatory scrutiny, Christie argued.
“There is a tremendous amount of risk throughout this regulatory process, and who bears that risk?” Christie asked last week. “The Spirit shareholder, and we were not comfortable with that risk.”Read Spirit's SEC filing