Spirit Airlines cancels its merger agreement with Frontier Airlines before announcing the results of the company's shareholder vote. File photo by Bill Greenblatt/UPI | License Photo
July 27 (UPI) -- Spirit Airlines has canceled its merger with Frontier Airlines, ending months of negotiations to form the fifth-largest U.S. carrier and reopening takeover talks with JetBlue Airways.
"While we are disappointed that we had to terminate our proposed merger with Frontier, we are proud of the dedicated work of our team members on the transaction over the past many months," Ted Christie, president and CEO of Spirit Airlines, said in a statement Wednesday.
"Moving forward, the Spirit board of directors will continue our ongoing discussions with JetBlue as we pursue the best path forward for Spirit and our stockholders," Christie said.
Spirit made the announcement shortly before the Florida-based airline was due to release the results of its shareholder vote on the merger, which was expected to be rejected, according to The Wall Street Journal.
In February, Frontier announced it would buy Spirit for $2.9 billion in cash and stock. The deal was worth $6.6 billion when accounting for newly assumed debt and other liabilities. Both airlines said they expected the merger to create $1 billion in savings per year for travelers as they expanded with more than 350 new planes and new discounted routes.
While Frontier executives said they were disappointed the deal was off Wednesday, they said they were unwilling to overpay for the discount airline, as JetBlue increased its offer last month.
JetBlue originally offered $3.6 billion in April and made a last-ditch effort to Spirit shareholders in June by increasing the breakup fee, which would kick in if the merger failed, and prepaying for shares.
Spirit turned down JetBlue several times over antitrust concerns and its investors, who would have retained a stake in a combined company with Frontier.
In an open letter last month, Frontier warned a merger with JetBlue would not get by antitrust regulators.
"JetBlue has thrown up a lot of smoke to have you believe that the regulatory risk of its proposal is identical to the Frontier-Spirit combination," the letter said. "That is not true, and requires you to ignore common sense and JetBlue's own admission about what it intends to do immediately upon acquiring and eliminating Spirit: remove seats and raise prices, both antitrust non-starters."
JetBlue responded to the letter saying Frontier's forecast was "pie in the sky."