The US low-cost airline JetBlue Airlines announced on Monday a takeover offer for its rival Spirit Airlines, which had preferred a merger with Frontier Airlines.
JetBlue proposes a cash purchase of Spirit shares at a price of $30 eachrepresenting a 60% premium to Frontier’s transaction value, a 77% premium to Spirit’s latest closing price, and a 38% premium to Spirit’s unaffected share price.
In addition, the airline also presented a document in which it asks Spirit shareholders to vote “no” to the proposed merger with Frontier, at a special meeting that will take place on June 10. Likewise, it qualifies the offer as “inferior, high risk and low value”.
“JetBlue offers more value with a cash premium, more security and more benefits for all stakeholders,” company boss Robin Hayes wrote in a letter to Spirit Airlines shareholders. “Frontier offers less value, more risk, no commitment on transfers and no breakage indemnity,” he added.
JetBlue said it was willing to return to its initial offer of $33 a share if Spirit agreed to return to the negotiating table.
At the beginning of the month, the board of directors of Spirit turned down a $3.6 billion takeover offer from JetBlueclaiming that he was concerned that the operation would be blocked by the competition authorities.
And it is that JetBlue has an association with American Airlines, the Northeast Alliance, which could be an obstacle for the purchase agreement to be carried out.
“Spirit’s antitrust rationale is a smokescreen to distract from the fact that its merger with Frontier faces similar regulatory risk, but offers no shareholder protection,” the company said.
Spirit had preferred Frontier’s $2.9 billion proposal. Spirit’s merger with Frontier would create the nation’s fifth-largest carrier in terms of seats offered, behind American, United, Delta and Southwest.
Avianca and GOL create one of the largest business groups in Latin America
The airlines Avianca (Colombia) and GOL (Brazil) announced an alliance in order to consolidate themselves as one of the most important business groups in Latin America, after the main shareholders of both companies signed a historic agreement for create a leading air transport group in the region under a structure tenure company called Abra Group Limited (Abra Group).
“Through the recent investments made by the shareholders of Avianca and Viva, the Group would also have 100% of the economic rights of Viva’s operations in Colombia and Peru, but would not control it, and would have a convertible credit in a investment representing a minority interest in the airline Sky Airline de Chile”, explained the parties.
Roberto Kriete, who will serve as Chairman of the Group’s Board of Directors, explained that together, Avianca and GOL will be the anchor of a network of Latin American airlines. These will have the lowest unit costs in their respective marketsthe leading loyalty programs throughout the region and other complementary businesses.
Abra will provide a platform that will allow operating airlines to further reduce their costsachieve greater economies of scale, continue to operate a fleet of state-of-the-art aircraft and expand its routes, services, product offerings and loyalty programs.
Together, the airlines could offer their customers the broadest and most complementary network of routes with minimal overlap between markets. Abra’s financial strength will provide participating airlines with long-term stability and agility, thereby driving constant and sustained investment in innovation and synergies.
“This agreement places the Abra airlines in a leadership position in the air transport market in the region, being able to serve a population of more than 1,000 million people and a GDP close to US$3,000 million dollars, generating capacity and revenue growth opportunities”, said Constantino de Oliveira Junior, CEO of the Group.
The Abra Group is a closely held company incorporated in the United Kingdom. Once the transaction is closed, Grupo Abra will control Avianca and GOL and, as a consequence, also will have non-controlling economic rights in Viva’s operations in Colombia and Peru. In addition, it would have a convertible credit in an investment representing a minority interest in the airline Sky Airline de Chile.
*With information from the AFP Agency