There’s a fresh round of fire in the battle to acquire discount carrier Spirit Airlines (NYSE:SAVE) as JetBlue Airways (NASDAQ:JBLU) just raised its bid for Spirit yet again. This, evidently, is in response to Frontier Group (NASDAQ:ULCC) increasing the cash portion of its offer to buy out Spirit yesterday. Both JBLU and SAVE stock are up on the news.
It’s a relentless game of one-upmanship that’s been going on for a while now. Earlier this month, JetBlue revised its buyout bid so that Spirit’s shareholders, if the deal went through, would receive $31.50 per share in cash. As a result, JetBlue’s offer would be worth $3.4 billion. To further sweeten the deal, JetBlue added $150 million to its proposed reverse breakup fee, so the total would be $350 million.
Yesterday, Frontier pushed back by adding $2 per share in its latest bid, thereby revising the new offer to $4.13 per share. Frontier also raised its proposed reverse breakup fee by $100 million to $350 million, matching JetBlue.
In response, JetBlue’s new proposal involves an accelerated prepayment of $2.50 per share, up from $1.50 a share in a previous offer. This would be structured as a cash dividend to the shareholders after the terms are approved. Not only that, but JetBlue is prepared to increase its breakup fee from $350 million to $400 million. On top of all that, JetBlue’s revised bid for Spirit Airlines includes a ticking fee mechanism, which could raise the overall value of the offer to $34.15 per share, which would equate to a whopping $3.7 billion.
What’s Happening With SAVE Stock and JBLU Stock?
Interestingly, SAVE stock got slammed yesterday after Frontier Group’s latest bid for Spirit Airlines was revealed. Today, in contrast, the Spirit share price was up 3% early in the trading session.
JBLU stock was also up 3% this morning. Clearly, both Spirit’s and JetBlue’s shareholders generally approve of JetBlue’s latest takeover bid. Perhaps they approve of the bidding war’s escalation, as well.
It’s bullish news all around, and the timing couldn’t be better as JetBlue and Spirit Airlines stock have been sluggish in 2022 so far. Only time will tell, but as the bidding war continues to heat up, the trading volume and share price of SAVE stock could head for the skies during the year’s second half.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
