(Bloomberg) -- JetBlue Airways Corp. continued its fight to acquire Spirit Airlines Inc., raising its all-cash bid yet again in response to an increased offer by rival suitor Frontier Group Holdings Inc. in the days before a crucial shareholder vote.
The new proposal includes an accelerated prepayment of $2.50 a share, structured as a cash dividend to Spirit shareholders after approval of the terms, JetBlue said Monday in a statement. That’s up from $1.50 a share in a prior offer. JetBlue also increased its breakup fee to $400 million from $350 million, to be paid if antitrust regulators block the combination.
The revised bid includes a so-called ticking fee mechanism as well, which could boost the overall value of the offer to $34.15 a share, or $3.7 billion. The pledges -- marking the fifth revision for JetBlue in its effort to secure a deal -- come a week after the carrier increased its bid to $33.50 a share.
JetBlue and Frontier are seeking to woo Spirit shareholders ahead of a Thursday vote that should end the bidding war for Spirit, a deep discounter with low fares and fees for anything extra. The would-be buyers covet Spirit for the growth and competitive strength they could quickly gain through an acquisition. The US industry is dominated by four major carriers, and the victor in the war for Spirit would be ranked fifth, based on domestic passenger traffic.
See also: ‘Top Gun’ Deal Morphs Into Airlines’ Fiercest M&A Brawl in Years
Frontier on Friday boosted the cash portion of its bid to $4.13 a share -- up about $2 from its original bid -- along with 1.9126 share of its stock for each of Spirit’s. Those terms valued the airline at about $2.6 billion based on the closing price that day. Spirit shareholders would receive $2.22 a share as a cash dividend once the transaction is approved. Frontier also raised its proposed breakup fee to $350 million.
Spirit’s board has rejected JetBlue’s offers repeatedly, saying the combination would be blocked by federal antitrust enforcers. Frontier has said its proposal would give shareholders better long-term value as the airline industry recovers from the pandemic and travel demand soars.
Frontier agreed in February to acquire Spirit in a cash-and-stock deal valued at $2.9 billion at that time. JetBlue challenged the merger with an unsolicited proposal two months later, kicking off the bidding war.
Spirit shares rose 1.9% to $23 at 5:54 p.m. after regular trading Monday in New York. JetBlue climbed less than 1% while Frontier rose 1.1%.
©2022 Bloomberg L.P.