M&A News: Frontier’s Acquisition Bid Crashes as Spirit Airlines Rejects it Again

U.S.-based Frontier Group’s (ULCC) acquisition bid for its bankrupt rival Spirit Airlines (SAVEQ) crashed as Spirit rejected another offer for $2.16 billion. Spirit declined the proposal, arguing that Frontier’s latest bid would provide less value compared to its restructuring plan and would lead to prolonged and more expensive Chapter 11 bankruptcy proceedings.

Third Time’s a Charm? Not for Frontier

On February 4, Frontier made its third and revised bid for Spirit. Under the new proposal, Spirit’s stakeholders would receive $400 million in second-lien debt issued by Frontier, along with 19% of Frontier’s common stock after the merger is completed. Later, Spirit presented a counteroffer, proposing that Spirit shareholders receive $600 million in debt and $1.185 billion in equity, which Frontier ultimately rejected.

In response to the latest proposal, Spirit Airlines noted that the revised offer failed to address several key risks and issues it had previously raised. Spirit also reiterated its goal to complete its restructuring by the first quarter. Notably, Spirit filed for bankruptcy protection in November 2024, citing mounting losses, a heavy debt burden, and increased competition.

Previously, Spirit rejected a proposal in late January that required Spirit’s note holders to invest $350 million in equity and pay a $35 million termination fee. However, Frontier eliminated both conditions in its revised offer made in February. Interestingly, the two airlines initially attempted to merge in 2022, but their plan was derailed by a competing offer from JetBlue Airways (JBLU).

Is ULCC a Good Stock to Buy?

According to TipRanks consensus, ULCC stock has a Hold rating, based on two Buy and eight Hold recommendations. The Frontier Group share price target of $9.56 suggests a decline of 1.75% from the current levels.

Year-to-date, ULCC stock has gained 37%.

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