(Reuters) -Spirit Airlines on Tuesday rejected Frontier Group’s revised acquisition offer, worth about $2.16 billion, saying the bid from its fellow ultra-low-cost carrier was less beneficial to shareholders than its ongoing reorganization plan.
Frontier’s fresh offer was a reiteration of its proposal from earlier this month, in which it had proposed that Spirit’s shareholders would get $400 million in debt and a 19% stake in Frontier.
However, it dropped a requirement that Spirit complete a $350 million equity rights offering and use the proceeds to retire its debtor-in-possession facility. It also requires the bankruptcy court-approved $35 million termination fee be waived.
However, Spirit, which filed for bankruptcy protection last year and expects to complete its restructuring in the first quarter, said the revised proposal did not address certain material risks and issues it had previously identified.
Instead, the Florida-based airline offered a counterproposal in which Spirit shareholders would get $600 million in debt and $1.185 billion in equity — which Frontier rejected.
“We remain convinced that the combination of Spirit and Frontier would have created more value than Spirit’s standalone plan,” Frontier said in a statement.
The two companies had been in merger talks since at least 2022, even before Spirit filed for bankruptcy due to prolonged periods of financial losses and a substantial debt load.
However, JetBlue Airways jumped into the fray and prevailed. But that deal was scrapped after a U.S. judge blocked it on anti-competition concerns.
Frontier revived its takeover efforts earlier this year, but Spirit had said the first offer was inferior to the one the two companies had discussed last year and sought an assurance that the deal would close, and that Frontier would not walk away.
(Reporting by Harshita Meenaktshi in Bengaluru; Editing by Savio D’Souza and Pooja Desai)
