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JetBlue to Buy Fellow US Airline Spirit for USD 7.6bn.

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MANews-(C)2009-2022

The boards of low-cost US airline JetBlue Airways Corp (NASDAQ: JBLU) and ultra-low-cost airline Spirit Airlines, Inc. (NYSE: SAVE) have approved a definitive merger agreement under which JetBlue will acquire Spirit for USD 33.50 per share in cash, in a deal with an adjusted enterprise value of USD 7.6bn, the companies said.

The total includes a prepayment of USD 2.50 per share in cash payable upon Spirit stockholders' approval of the transaction and a ticking fee of USD 0.10 per month starting in January 2023 through closing, for an aggregate fully diluted equity value of USD 3.8bn and an adjusted enterprise value of USD 7.6bn.

This deal was chosen by the Spirit board, which is now backing out of an existing deal with Frontier Airlines.

The combined airline will have a fleet of 458 aircraft on a pro forma basis and an order book of over 300 Airbus aircraft with fuel-efficient, lower-carbon new engine option, or neo, engines, providing increased flexibility and efficiency while mitigating the risk of limited availability of aircraft.

The acquisition will accelerate JetBlue's organic growth plan with 1,700+ daily flights to more than 125 destinations in 30 countries based on December 2022 schedules.

It will increase relevance for JetBlue in certain key focus cities (Fort Lauderdale, Orlando, San Juan, and Los Angeles) as well as Big Four airline hubs (Las Vegas, Dallas, Houston, Chicago, Detroit, Atlanta, and Miami).

In the event the transaction is consummated on or before December 2023, the transaction consideration will be USD 33.50 per share, increasing over time to up to USD 34.15 per share, in the event the transaction is consummated at the outside date in July 2024.

The transaction consideration of USD 33.50 per share implies an aggregate fully diluted equity value of approximately USD 3.8bn and an adjusted enterprise value of USD 7.6bn.

JetBlue expects to achieve USD 600-700m in net annual synergies once...

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