- JetBlue has reached a deal to buy Spirit Airlines for $3.8 billion.
- The acquisition would create the fifth-largest carrier in the United States if completed.
- The agreement comes soon after Spirit cancelled its merger deal with Frontier.
JetBlue on Thursday agreed to buy Spirit Airlines for $3.8 billion, an acquisition which would make it the fifth-biggest carrier in the US.
In a statement, JetBlue said it will pay $33.50 per share in cash for Spirit. This includes a prepayment of $2.50 per share in cash payable after Spirit stockholders' approve the transaction and a ticking fee of 10 cents per share, per month starting in January until the deal is closed, per the statement.
"Spirit and JetBlue will continue to advance our shared goal of disrupting the industry to bring down fares from the Big Four airlines," Robin Hayes, JetBlue CEO, said in the statement.
The agreement comes hours after Spirit Airlines ended the merger agreement with Frontier Airlines it announced in February this year. It marks the end of months-long competition between the two low-cost airlines for Spirit.
JetBlue has increased its offer to buy Spirit over recent months, creating a bidding war against Frontier. JetBlue offered to buy Spirit in spring for $3.6 billion but Spirit rejected the bid after it agreed to a $2.9 billion merger with Frontier in February. Spirit's board said that JetBlue's offer involved "an unacceptable level of closing risk."
JetBlue then wanted to carry out a hostile takeover attempt for Spirit, The Wall Street Journal reported. Plans to launch a tender offer for Spirit shareholders' shares were designed to put pressure on the airline's management to re-engage in merger negotiations, people with knowledge of the matter told The Journal.
JetBlue previously told Insider in a statement that it was "pleased" the Frontier-Spirit deal didn't go ahead.