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July 28 (UPI) -- After a lengthy bidding war with Frontier Airlines that included an attempt at a hostile takeover, JetBlue Airways announced on Thursday that it's merging with Spirit Airlines to create the United States' fifth-largest carrier. JetBlue has been trying to buy Spirit for months, even after the budget Florida-based carrier had a merger agreement with Frontier. In May, JetBlue attempted a hostile takeover of Spirit by appealing directly to the airline's shareholders.
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Spirit, which had repeatedly rejected prior overtures from JetBlue, finally went ahead with the merger after its deal with Frontier fell apart on Wednesday.
JetBlue said Thursday it will buy Spirit for $3.8 billion, but some experts -- and Spirit executives -- have previously expressed doubt that such a merger would be approved by federal regulators.
The sale boils down to a value of $33.50 per share and includes a reverse break-up clause that would have JetBlue pay Spirit $70 million if the merger fails.
"We are excited to deliver this compelling combination that turbocharges our strategic growth, enabling JetBlue to bring our unique blend of low fares and exceptional service to more customers, on more routes," JetBlue CEO Robin Hayes said in a statement. "We look forward to welcoming Spirit's outstanding Team Members to JetBlue and together creating a customer-centric, fifth-largest carrier in the United States.
"Spirit and JetBlue will continue to advance our shared goal of disrupting the industry to bring down fares from the Big Four airlines."
In April, JetBlue made an all-cash bid for Spirit while it and Frontier were still at the negotiating table. The result was a months-long bidding war for the budget carrier before Frontier and Spirit threw in the towel Wednesday.
During the saga, Spirit CEO Ted Christie said he was doubtful that a merger between his airline and JetBlue would clear regulatory scrutiny. On Thursday, however, he spoke positively about the deal. "We are thrilled to unite with JetBlue," he said in a statement. "We look forward to working with JetBlue to complete the transaction."Bringing our two airlines together will be a game changer, and we are confident that JetBlue will deliver opportunities for our guests and team members."
Part of the regulatory concerns are based on an antitrust lawsuit from the Justice Department, filed a year ago, over JetBlue's "Northeast Alliance" partnership with American Airlines.JetBlue says it plans to buy more planes, hire more pilots and renovate Spirit aircraft by adding more legroom and in-flight entertainment.
Both carriers said that they expect the deal to close no later than the first half of 2024. The merger must be approved by federal regulators and Spirit shareholders.
