Why Shares of Spirit Airlines Are Surging This Week
Shares of Spirit Airlines (NYSE: SAVE) rose 12% in the week through the close of trading on Thursday. The move comes in response to JetBlue Airways increasing its offer to buy Spirit for a total consideration of $33.50 per share in cash. JetBlue believes its offer trumps Frontier Airlines' earlier bid, not least as it implies a 67.6% premium to Frontier's offer of $19.99 per share as of June 17.
While JetBlue's offer may appear to be a "no-brainer" for Spirit shareholders, there are concerns that antitrust regulators may seek to block the deal.
JetBlue is offering $1.50 per share in cash as a prepayment to Spirit stockholders upon voting for the deal to relieve fears over the issue. A further $1.70 per share will be paid to Spirit if the merger agreement is terminated due to antitrust reasons. In total, the reverse breakup fee comes to $350 million in cash terms -- a figure higher than Frontier's breakup fee offer of $250 million.
Source Fool.com
