JetBlue launched a bid for Spirit Airlines. If competition concerns ground this takeover, JetBlue investors will breathe a big sigh of relief, writes JMAGuilford:
JetBlue on April 5 said it had made an offer to acquire rival Spirit Airlines for $33 a share in cash, valuing the ultra-low-cost airline’s equity at around $3.6 billion. The offer comes after Spirit on February 7 agreed to merge with fellow low-cost carrier Frontier Airlines in a cash-and-stock deal valuing Spirit at $2.9 billion.
JetBlue is already facing litigation from the U.S. Department of Justice, which is seeking to block its Northeastern Alliance agreement with American Airlines. Under the terms of the partnership, JetBlue and American pool resources and revenue in certain markets in the Northeast. JetBlue shares were down 5% at $12.94 by 11.30 a.m. on April 6. Spirit Airlines shares were trading at $26.47, about 25% higher than prior to JetBlue’s bid.A JetBlue Airways logo is seen at the check-in counter at LaGuardia Airport in New York April 5, 2012. JetBlue, experts say, is well managed and financially healthy with a market cap of roughly $1.4 billion. It captures about 5 percent of the U.S. market by revenue through 750 daily flights to 70 cities on 250 Airbus and Embraer jets.
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