How Spirit Airlines CEO Christie did his JetBlue deal U-turn
By Anirban Sen
July 29 (Reuters) - Spirit Airlines Inc SAVE.N Chief Executive Ted Christie had been dismissive of the possibility that regulators would allow his low-cost U.S. airline to be sold to JetBlue Airways Corp JBLU.O for the last four months.
"You don't need to be an antitrust attorney to see the issues here," Christie stated in several media interviews after JetBlue unveiled its bid in April, gatecrashing a deal he had clinched in February to sell Spirit to Frontier Group Holdings Inc ULCC.O .
Christie argued that Spirit would cease to be a budget airline under JetBlue, driving up airfares.
Yet this week he agreed to sell Spirit to JetBlue for $3.8 billion in cash, noting in a statement that he was "thrilled to unite with JetBlue" and that he would work to "complete the transaction."
It was a reversal driven not by a change of conviction but by Spirit's failure to persuade its shareholders that they would be better off if they sold the company to Frontier for $2.7 billion in cash and stock, according to six people familiar with the matter who gave an account of the deal discussions on condition of anonymity.
Christie had tried to convince Spirit shareholders that the shares they would receive in Frontier would significantly go up in value in the next two years and more than make up for Frontier's bid being over $1 billion lower than JetBlue's.
He also argued that the Frontier deal was more likely to be approved by antitrust regulators.
His pitch was not successful and he was forced to postpone the Spirit shareholder vote on the Frontier deal four times in a bid to muster more support from investors. He secured some small financial sweeteners from Frontier to their deal, but those were not enough to change Spirit shareholders' mind.
A key moment came on July 10, when Frontier CEO Barry Biffle wrote in a letter to Spirit that his company's latest offer was its "best and final," the sources said.
Christie accepted at that point he would not get a better deal from Frontier that he could take to a shareholder vote, and he began preparations for their deal to collapse once Spirit shareholders shot it down, the sources said.
As some Spirit investors pressured the company to accept JetBlue's offer, Christie started to lay the ground for their agreement, the sources said. He instructed Spirit's bankers at Barclays and Morgan Stanley to push hard for more concessions without jeopardizing the prospects of a deal with JetBlue, the sources added.
When the Frontier deal failed to get enough backing from Spirit shareholders in a vote on Wednesday, Christie got on the phone with JetBlue CEO Robin Hayes and quickly finalized a deal, which was almost identical to JetBlue's latest offer.
Asked about the U-turn in an interview with Reuters on Thursday, Christie said the decision he and Spirit's board took was the best for his shareholders.
"It was a very rigorous review by the board," Christie said.
Christie would have received a "golden parachute" of $11.8 million had the deal with Frontier been completed. He also stands to receive a payout once the deal with JetBlue is completed, although that amount has not yet been disclosed.
Reporting by Anirban Sen in New York; Editing by Greg Roumeliotis and Muralikumar Anantharaman
Mga Kaugnay na Asset
Disclaimer: Ang mga kabilang sa XM Group ay nagbibigay lang ng serbisyo sa pagpapatupad at pag-access sa aming Online Trading Facility, kung saan pinapahintulutan nito ang pagtingin at/o paggamit sa nilalaman na makikita sa website o sa pamamagitan nito, at walang layuning palitan o palawigin ito, at hindi din ito papalitan o papalawigin. Ang naturang pag-access at paggamit ay palaging alinsunod sa: (i) Mga Tuntunin at Kundisyon; (ii) Mga Babala sa Risk; at (iii) Kabuuang Disclaimer. Kaya naman ang naturang nilalaman ay ituturing na pangkalahatang impormasyon lamang. Mangyaring isaalang-alang na ang mga nilalaman ng aming Online Trading Facility ay hindi paglikom, o alok, para magsagawa ng anumang transaksyon sa mga pinansyal na market. Ang pag-trade sa alinmang pinansyal na market ay nagtataglay ng mataas na lebel ng risk sa iyong kapital.
Lahat ng materyales na nakalathala sa aming Online Trading Facility ay nakalaan para sa layuning edukasyonal/pang-impormasyon lamang at hindi naglalaman – at hindi dapat ituring bilang naglalaman – ng payo at rekomendasyon na pangpinansyal, tungkol sa buwis sa pag-i-invest, o pang-trade, o tala ng aming presyo sa pag-trade, o alok para sa, o paglikom ng, transaksyon sa alinmang pinansyal na instrument o hindi ginustong pinansyal na promosyon.
Sa anumang nilalaman na galing sa ikatlong partido, pati na ang mga nilalaman na inihanda ng XM, ang mga naturang opinyon, balita, pananaliksik, pag-analisa, presyo, ibang impormasyon o link sa ibang mga site na makikita sa website na ito ay ibibigay tulad ng nandoon, bilang pangkalahatang komentaryo sa market at hindi ito nagtataglay ng payo sa pag-i-invest. Kung ang alinmang nilalaman nito ay itinuring bilang pananaliksik sa pag-i-invest, kailangan mong isaalang-alang at tanggapin na hindi ito inilaan at inihanda alinsunod sa mga legal na pangangailangan na idinisenyo para maisulong ang pagsasarili ng pananaliksik sa pag-i-invest, at dahil dito ituturing ito na komunikasyon sa marketing sa ilalim ng mga kaugnay na batas at regulasyon. Mangyaring siguruhin na nabasa at naintindihan mo ang aming Notipikasyon sa Hindi Independyenteng Pananaliksik sa Pag-i-invest at Babala sa Risk na may kinalaman sa impormasyong nakalagay sa itaas, na maa-access dito.