JetBlue has agreed to buy Spirit Airlines for $3.8 billion in a deal that would create the nation’s fifth-largest airline if approved by US regulators.
Thursday’s deal comes a day after Spirit’s attempt to merge with Frontier Airlines. She fell apart. Spirit had recommended its shareholders approve a lower offer from Frontier, saying antitrust regulators are more likely to reject JetBlue’s offer.
“This combination is an exciting opportunity to diversify and expand our network, add jobs and new possibilities for crew members, and expand our platform for profitable growth.” JetBlue CEO Robin Hayes said in a statement.
The combined airline, which will be based in New York and led by Hayes, would have a fleet of 458 planes. The airlines will continue to operate independently until the transaction closes.
JetBlue said Thursday it would pay $33.50 per share in cash for Spirit, including an advance payment of $2.50 per share in cash payable once Spirit shareholders approve the transaction. There is also a ticking fee of 10 cents per month from January 2023 until closing.
If the transaction is completed before December 2023, the deal will be $33.50 per share, increasing over time to $34.15 per share, should the transaction close in July 2024.
If the deal does not close due to antitrust reasons, JetBlue will pay Spirit a $70 million reverse breakup fee and Spirit shareholders a $400 million reverse breakup fee less any amounts paid to Spirit shareholders prior to the deal being closed. termination.
JetBlue anticipates $600-700 million in annual savings once the transaction is complete. Annual revenue for the combined company is expected to be about $11.9 billion, based on 2019 revenue.
The deal still needs required regulatory approvals and Spirit shareholder approval. The companies expect to complete the regulatory process and close the transaction no later than the first half of 2024.