Frontier Offers $250M Reverse Split Fee If Spirit Merger Blocked

A Frontier Airlines aircraft next to a Spirit Airlines aircraft at Fort Lauderdale-Hollywood International Airport on May 16, 2022 in Fort Lauderdale, Florida.

Joe Radle | Getty Images

Parent company Frontier Airlines on Thursday said it would pay Spirit Airlines a $250 million fine if regulators do not approve a planned merger of the two discount carriers for antitrust reasons. This attempt is aimed at persuading investors to approve the deal next week. as competitor JetBlue Airways is trying to buy Spirit outright.

“The combination of a higher reverse termination fee and a much greater likelihood of closure as a result of the Frontier merger provides significantly more regulatory protection for Spirit’s shareholders than the deal proposed by JetBlue,” Mac Gardner, Spirit’s chairman, said in a press release.

New York-based JetBlue offered $33 a share, or $3.6 billion in cash for Spirit, in April, on top of the $2.9 billion cash and stock deal Spirit and Frontier announced in February.

Spirit’s board of directors rejected JetBlue’s bids, and last month JetBlue made a tender offer at $30 a share and urged Spirit’s shareholders to vote against the deal.

Spirit said the JetBlue deal is unlikely to be approved by regulators. JetBlue’s offer includes a $200 million fee if regulators do not approve the acquisition.

On Tuesday, proxy advisory firm Institutional Shareholder Services advised Spirit shareholders to vote against the Frontier deal, raising concerns about no termination fee.

Spirit’s shareholder meeting is scheduled for June 10th.

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