(MENAFN- AFP)
American low-cost carrier JetBlue Airlines announced on Monday a hostile takeover bid for its rival Spirit Airlines, which had rejected a previous bid in favour of a merger with Frontier.
Earlier this month, Spirit reiterated its support for a merger with Frontier Airlines, saying it concluded the $3.6 billion JetBlue offer involved excessive regulatory risk.
It said the Department of Justice's challenge of JetBlue's alliance with American Airlines raised the odds that a takeover of Spirit by JetBlue might get blocked.
"JetBlue has filed a 'Vote No' proxy statement and commenced an all-cash tender offer," JetBlue said in a statement, asking Spirit shareholders to reject the proposed merger with Frontier at a meeting on 10 June.
The company offered a cash buyout of Spirit shares at a unit price of $30 -- adding that it was prepared to return to its original offer of $33 per share if Spirit agreed to return to the negotiating table.
"The Spirit Board of Directors has failed to act in the best interests of their shareholders by refusing to engage constructively on our clearly superior proposal to acquire Spirit," JetBlue said in a Monday statement.
"The Spirit Board failed to provide us the necessary diligence information they provided Frontier and then summarily rejected our proposal, which addressed their regulatory concerns, without asking us even a single question about it.
"They based their rejection on unsupportable claims that are easily refuted."
In Wall Street trade ahead of the open, Sprit shares soared by 20 percent, while JetBlue and Frontier were both also up.
In early February, budget carriers Spirit and Frontier announced they were combining to create a competitive low-cost carrier that aims to test the dominance of larger rivals.
The merger would create the nation's fifth-largest airline by seat capacity, behind American, United, Delta and Southwest.
But in April, JetBlue challenged the deal, bidding to buy Spirit and offering a similar argument about challenging larger US carriers.
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