US airline JetBlue agrees to buy Spirit Airlines for $3.8 billion

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JetBlue Airways have announced that it has sealed the deal to buy Spirit Airlines for $3.8 billion. This acquisition would make it the fifth-biggest carrier in the United States.  

In a statement, JetBlue said it would pay $33.50 per share in cash for Spirit. This would include a prepayment of $2.50 per share in cash payable after Spirit stockholders approve the transaction and a ticking fee of 10 cents per share per month starting in January until the deal is closed.  

CEO of Jetblue Airline Robin Hayes said that Spirit and JetBlue would continue to advance the shared goal of bringing down fares from the big four airlines of the American sky. 

The four airlines that dominate the sky are United Airlines, American Airlines, Southwest Airlines and Delta Air Lines.  

The agreement comes after Spirit Airlines ended the merger agreement with Frontier Airlines announced in February this year. It marks the end of a months-long competition between Jetblue and Frontier Airlines for Spirit.  

JetBlue has increased its offer to buy Spirit over recent months, creating a bidding war against Frontier. JetBlue had earlier offered to buy Spirit in spring for $3.6 billion. However, Spirit rejected the bid and agreed to a $2.9 billion merger with Frontier in February. 

Spirit’s board declined Jetblue, reasoning that JetBlue’s offer involved “an unacceptable level of closing risk.”  

JetBlue then allegedly tried to carry out a hostile takeover attempt for Spirit. Plans to launch a tender offer for Spirit shareholders’ shares were designed to pressure the airline’s management to re-engage in merger negotiations.  

However, things will not end here as Jetblue still needs the approval of antitrust regulators. In addition, the Justice Department has been concerned that airline competition is declining due to mergers.  

As a result, the Justice Department is suing Jetblue and American Airlines. The trial is scheduled to begin this fall. 


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