Shortly before Spirit Airlines was to announce Wednesday the results of a shareholder vote on its proposed merger with Frontier Airlines, the two carriers mutually called off the deal, each carrier confirmed.
Frontier included the news in its second-quarter earnings press release.
“While we are disappointed that Spirit Airlines shareholders failed to recognize the value and consumer potential inherent in our proposed combination, the Frontier Board took a discipline approach throughout the course of its negotiations with Spirit,” Frontier chairman of the board William Franke said in a statement. “We were focused on offering the appropriate value for Spirit, while prioritizing consumers and the best interests of Frontier, our employees and shareholders.”
Frontier in February agreed to merge with Spirit but has been locked in a takeover battle for Spirit with JetBlue Airways since that carrier’s initial bid in April. The two carriers upped their offers during the ensuing months, while Spirit continued to stand behind the Frontier deal, yet postponed the shareholder vote four times.
“While we are disappointed that we had to terminate our proposed merger with Frontier, we are proud of the dedicated work of our dedicated Team Members on the transaction over the past many months,” Spirit president and CEO Ted Christie said in a statement. “Moving forward, the Spirit Board of Directors will continue our ongoing discussions with JetBlue as we pursue the best path forward for Spirit and our stockholders.”
Today’s announcement doesn’t mean a deal with JetBlue is imminent. Spirit repeatedly declined JetBlue’s offers, citing its concern the deal would not gain regulatory approval—mainly because of JetBlue’s Northeast Alliance with American Airlines and the pending antitrust suit against it.
Spirit is obligated to reimburse Frontier $25 million of Frontier’s incurred merger-related costs, according to Frontier, adding that “should Spirit enter into an acquisition agreement in the next 12 months with another acquiror and it subsequently consummates the transaction, Frontier will be owed an additional $69 million.”
JetBlue in a statement said, “We are pleased that the merger agreement with Frontier has been terminated and we are engaged in ongoing discussions with Spirit toward a consensual agreement as soon as possible. We remain fully committed to completing this transaction so we can create a compelling national challenger to the dominant airlines with more opportunities for all.”
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