Spirit Airlines declined Frontier Group’s revised acquisition offer, valued at approximately $2.16 billion, on Tuesday. The ultra-low-cost carrier stated that the bid was less advantageous to its shareholders compared to its current reorganization plan. Frontier’s updated offer essentially reiterated its previous proposal from earlier this month, which offered Spirit shareholders $400 million in debt and a 19% stake in the combined company.
A key change in the revised offer was the removal of the requirement for Spirit to complete a $350 million equity rights offering and use the proceeds to retire its debtor-in-possession facility. The revised bid also stipulated a waiver of the $35 million termination fee approved by the bankruptcy court. Despite these adjustments, Spirit, which filed for bankruptcy protection in 2022 and anticipates completing its restructuring in the first quarter of this year, maintained that the revised proposal failed to address significant risks and concerns previously identified.
In response, Spirit presented a counterproposal offering its shareholders $600 million in debt and $1.185 billion in equity. However, Frontier rejected this counteroffer. Frontier expressed its continued belief that a merger between the two airlines would have generated more value than Spirit’s independent plan.
Merger discussions between Spirit and Frontier date back to at least 2022, predating Spirit’s bankruptcy filing, which stemmed from extended periods of financial losses and substantial debt. JetBlue Airways had previously entered the bidding process and successfully secured a deal with Spirit. However, this agreement was ultimately terminated after a U.S. judge blocked it due to antitrust concerns.
Frontier renewed its acquisition attempts earlier this year. Spirit, however, deemed the initial offer less favorable than the terms discussed in 2022 and sought assurances regarding the deal’s closure and Frontier’s commitment. The rejection of Frontier’s revised bid signals a continued period of uncertainty for Spirit Airlines as it navigates its ongoing reorganization and explores alternative paths forward. The airline’s commitment to its standalone plan suggests a belief in its ability to recover and achieve long-term viability independent of a merger.
