The Clap Frontier Airlines (NASDAQ: ULCC) is offering Spirit Airlines (NYSE: SAVE) a $250 million breakup fee in the case regulators reject the deal to maintain competitiveness in the industry.
Backstory Frontier was close to merging with Spirit Airlines last February, but Spirit soon received a cash takeover offer from JetBlue (NASDAQ: JBLU) that was considerably higher than Frontier’s offer. Spirit rejected JetBlue’s offer, but JetBlue refused to take no for an answer.
Why this matters Frontier’s $250 million breakup fee offer is a move to persuade Spirit shareholders to approve the deal at their next shareholder meeting on June 10, 2022. It’s well worth noting that JetBlue’s offer also has a breakup fee, worth $200 million.