- JetBlue offers $33.50 for SAVE, above earlier offer of $31.50 per share.
- The deal would value Spirit Airlines at $3.7 billion.
- Spirit's board still favors deal with Frontier worth $2.2 billion.
Spirit Airlines (SAVE) stock has climbed 12.8% on Tuesday on the back of news that JetBlue Airways (JBLU) is not giving up on acquiring the discount carrier. JetBlue raised its offer from $31.50 a share to $33.50 a share, or $3.7 billion. SAVE stock is trading at $24 in Tuesday's premarket.
Also read: Amazon Stock Deep Dive: AMZN price target at $106 with near-term risks offset by long-term growth
Spirit Airlines Stock News: Antitrust issues still linger
Spirit Airlines board is set to hold a shareholder vote on June 30 concerning the proposed mergers and said they would communicate with investors before the vote is held. Until now Spirit Airlines' board has said it favors a different deal with Frontier Group (ULCC) that only values it at $2.9 billion. Citing antitrust statutes, regulators would look more favorably on a deal with Frontier rather than JetBlue, according to Spirit's management and board.
“After discussions with the Spirit team last week and further due diligence review, we are more convinced than ever that a JetBlue-Spirit transaction would create a true national competitor to the Big Four and deliver value to all of our stakeholders,” JetBlue Chief Executive Officer Robin Hayes said. The big four is a nickname for the four largest carriers that control about 80% of the US market.
JetBlue now says it is willing to divest certain assets it owns as well as some owned by Spirit if the merger were to go through. Selling off certain assets would allow it to pass muster with regulators, according to the company. JetBlue is currently being sued for its alliance with American Airlines in the Northeast corridor of the US and does not wish to end its partnership with American, which is one of the sticking points in the deal.
Spirit Airlines Stock Forecast: SAVE trades in between two offers
With SAVE stock moving to $24 a share in the premarket, at least some traders must think Spirit might change its mind and go with JetBlue for the higher sale price. Frontier's offer was to give buy each outstanding share with 1.9126 shares of ULCC stock and an additional $2.13 apiece.
As of this morning, Frontier stock is trading at $9.61, which makes this entire deal worth only $20.51 a share. If Frontier wins the June 30 vote, then buyers at $24 will lose approximately 14.5%. If JetBlue wins approval for its offer at $33.50 a share, then buyers at $24 stand to make 39.6%.
SAVE daily chart
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