Frontier's proposed merger with Spirit Airlines faces rejection once more
Frontier's latestventurewithSpirithashitanotherroadblock. Backin February, Frontier put forth a revised takeoverproposal that included a $400 million debt payout and a 19% stake in Frontier for Spirit's shareholders. However, Frontier also dropped the requirement for Spirit to complete a $350 million equity rights offering and waived the $35 million termination fee.
Unfortunately for Frontier, Spirit didn't find this proposition all that enticing. The Florida-based airline, which filed for bankruptcy last year and is expected to wrap up its restructuring in Q1, claimed that the revised offer didn't address certain risks and issues they'd previously flagged.
In response, Spirit came up with a counteroffer of their own; shareholders would get $600 million in debt and $1.185 billion in equity, an offer Frontier swiftly turned down.
The on-and-off merger talks between the two carriers date back to at least 2022, even before Spirit's bankruptcy filing due to financial losses and a hefty debt burden. Jumping into the fray was JetBlue, but that deal unraveled after a U.S. judge blocked it due to antitrust concerns.
Frontier re-entered the ring early this year, but Spirit wanted a guarantee that the deal would close and Frontier wouldn't bolt. They also felt the initial offer was inferior to their discussions last year.
As of now, Spirit is pushing forward with its restructuring plan, with a court hearing scheduled for February 13 to consider approval of their reorganization plan. Despite the rejection, Frontier continues to believe their proposal would offer value to Spirit's stakeholders, fostering a leaner, more potent low-cost carrier with substantial synergies.
Despite Frontier's belief that their proposal would benefit Spirit's stakeholders, the ongoing business negotiations between the two airlines have led to multiple roadblocks. Regrettably, Spirit's latest counteroffer did not align with Frontier's financial strategy in their business dealings.
