- Spirit Airlines stock soars as JetBlue goes hostile.
- SAVE stock looks for new frontiers for the deal.
- SAVE up 13% in premarket to $19.40.
If you have managed to make it this far past all the puns, thanks for staying with us! Thankfully, we have some good news to report as a stock is actually up. This is a rare occurrence these days apart from Friday when everything rallied on what may be a bear market bounce. JetBlue (JBLU) tried to take over Spirit (SAVE) last month with an all-cash $3.6 billion offer, which would mean $33 per share,. Spirit had been in the throes of a merger with another discount carrier, Frontier (ULCC). Spirit decided to stay with Frontier and rejected the JetBlue offer. On Monday morning, however, JetBlue decided to go hostile with its offer for Spirit.
Spirit Airlines Stock News
JetBlue said it will offer a $30 per share tender offer to SAVE stockholders but will go back to its original $33 per share offer if JetBlue comes back to the negotiating table. JetBlue said its tender offer of $30 per SAVE share is a 60% premium to the Frontier deal. JetBlue has also urged Spirit shareholders to reject the Frontier merger. The deal had been getting ugly with both JetBlue and Spirit throwing barbs at one another. Spirit Airlines doubts that a deal with JetBlue would get regulatory approval due to JetBlue's alliance with American Airlines.
"Ask yourself a simple question: Why won’t the Spirit board engage with us constructively? The interests of Bill Franke’s Indigo Partners and the long-standing relationships between the two companies is the obvious answer," said JetBlue CEO Robin Hayes in a letter to Spirit shareholders. “JetBlue offers more value – a significant premium in cash – more certainty, and more benefits for all stakeholders."
Spirit's CEO responded on a recent conference call: "I have wondered whether blocking our deal with Frontier is, in fact, their goal. Over the last month, we've seen a lot of third parties comment on the deal. You'll see on Slide 8, there has been a consistent and vocal commentary from informed market participants such as you all, arguing that a JetBlue and Spirit combination faces significant regulatory scrutiny and substantial completion risk. This is in stark contrast to third-party agreement that a Frontier-Spirit merger delivers greater closing certainty, driven by great competition in the U.S. industry."
It definitely looks like a hostile takeover is the only way this one will be resolved. For the short term anyway, money always talks. Eventually it may force them to come to the negotiating table.
Spirit Airlines Stock Forecast
$30 or even $33 looks nice given where SAVE stock is currently trading. Even with the 13% spike on Monday it is still only at $19.40. A big discount speaks to the probability of this deal getting done.
SAVE stock chart, daily
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