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Frontier Sweetens Spirit Airways Deal to Include Reverse Termination Fee

Mark Young

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Frontier (NASDAQ:ULCC) enhanced its agreement with Spirit Airlines (NYSE:SAVE) to include a reverse termination fee after a prominent proxy adviser recommended Spirit holders vote against the deal.

Frontier (ULCC) would pay a reverse termination fee of $250 million, or $2.23 per share, to Spirit (SAVE) if the combination is not consummated for antitrust reasons, according to a statement.

JetBlue (NASDAQ:JBLU) and Frontier (ULCC) have been waging a battle for Spirit (SAVE) over the last few months after Frontier originally agreed to a acquire the ultra-low-cost carrier. Frontier has repeatedly rejected the Jetblue offers arguing that the deal would never get passed U.S. antitrust regulators.

Proxy firm ISS argued in its recommendation on Tuesday that the Spirit/Frontier deal should be rejected as it lacked a reverse termination fee. Jetblue’s (JBLU) offer for Spirit (SAVE) includes a $200 million reverse termination fee.

ISS wrote that Spirit (SAVE) board’s view that a Frontier (ULCC) deal has a safer route toward regulatory approval isn’t supported by “any guarantee of value” for holders if the deal is rejected by regulators.

“The combination of a higher reverse termination fee and a much greater likelihood to close in a Frontier merger provides substantially more regulatory protection for Spirit stockholders than the transaction proposed by JetBlue,” said Mac Gardner, chairman of the Spirt board, said in the statement.

Last week, Spirit Airlines CEO called JetBlue offer “cynical” in scathing rebuke of unsolicited bid.

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Original Source: seekingalpha.com

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