The battle between Frontier Group Holdings (Frontier) and JetBlue Airways Corp. (JetBlue) for the acquisition of Spirit Airlines Inc. (Spirit) has taken another twist as proxy advisory firm Institutional Shareholder Services Inc (ISS) has changed its recommendation subsequent to the most recent revised offer from Frontier.
“On balance, support for the merger with Frontier on the revised terms is warranted,” the proxy firm stated in its most recent report. The reason for the change in advice comes on the back of an offer on June 24 from Frontier of an additional US$2.00 per share, which has now matched the US$2.00 increased offer per share from JetBlue. Under the revised terms, Frontier will bump up the cash component of the deal to US$4.13 per share, along with 1.9126 Frontier shares in the cash-and-stock deal. Additionally, Frontier is offering a prepayment of US$2.22 per share compared to JetBlue’s US$1.50.
Frontier has also increased its reverse termination fee from US$250 million to US$350 million. Another reason why Spirit will be more interested in the Frontier offer is the belief that JetBlue will struggle to get approval from U.S. regulators for the merger with Spirit as a consequence of its Northeast Alliance partnership with American Airlines. Spirit shareholders are due to hold a vote on the Frontier deal on June 30.