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 attempted merger with Frontier Airlines failed. Spirit had recommended that 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 opportunities 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 run by Hayes, would have a fleet of 458 aircraft. The airlines will continue to operate independently until the transaction closes.
JetBlue said Thursday it will pay $33.50 per share in cash for Spirit, including a $2.50 per share cash prepayment 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 deal closes before December 2023, the deal will be $33.50 per share, increasing over time to $34.15 per share, should the deal close by the July 2024 deadline .
If the deal does not close for antitrust reasons, JetBlue will pay Spirit a reverse severance fee of $70 million and Spirit shareholders a reverse severance fee of $400 million less any amounts paid to Spirit shareholders. before termination.
JetBlue expects annual savings of $600 million to $700 million once the transaction is complete. The combined company’s annual revenue is expected to be approximately $11.9 billion, based on 2019 revenue.
The deal still needs to receive 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.
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