BY Richard Summerfield
Spirit Airlines and Frontier Group Holdings have agreed a $2.9bn cash-and-stock merger deal, the companies have announced.
The deal has a transaction value of $6.6bn including for the assumption of net debt and operating lease liabilities, the companies said in a statement. Upon completion, Frontier will own a 51.5 percent stake in the combined entity, while the remaining 48.5 percent will be held by Spirit’s shareholders. Spirit investors will receive 1.9126 shares of Frontier plus $2.13 in cash for each share they own, giving Spirit shareholders an implied value of $25.83 per share - a 19 percent premium over the value of Spirit shares at the end of last week, the companies said.
The merger is expected to close in the second half of 2022, subject to satisfaction of customary closing conditions, including completion of the regulatory review process and approval by Spirit stockholders.
“We worked jointly with the Board of Directors and senior management team across both carriers to arrive at a combination of two complementary businesses that together will create America’s most competitive ultra-low fare airline for the benefit of consumers,” said William A. Franke, the chair of Frontier’s board of directors and the managing partner of Indigo Partners, Frontier’s majority shareholder.
“We are thrilled to join forces with Frontier to further democratize air travel,” said Ted Christie, president and chief executive of Spirit. “This transaction is centered around creating an aggressive ultra-low fare competitor to serve our Guests even better, expand career opportunities for our Team Members and increase competitive pressure, resulting in more consumer-friendly fares for the flying public. We look forward to uniting our talented teams to shake up the airline industry while also continuing our commitment to excellent Guest service.”
“This combination is all about growth, opportunities and creating value for everyone – from our Guests to our Team Members to the flying public at large,” said Mac Gardner, chairman of the board of Spirit. “We’re a perfect fit – our businesses share similar values, including our longstanding commitment to affordable travel. At the same time, we have complementary footprints and fleets, including one of the youngest and greenest fleets worldwide. Together, we will be even more competitive for our Guests and our Team Members, and we are confident we can deliver on the benefits of this combination to consumers.”