The American low-cost airline Spirit Airlines has been in discussions with both Frontier and Jetblue for some time. Now it is clear that Jetblue is entering the tug-of-war and creating the fifth largest airline in the United States in a deal worth $3.8 billion. 

The deal, announced Thursday morning, ends a months-long bidding war and comes hours after Spirit announced it had scrapped plans for a deal with Frontier Airlines. It reports CNBC.

Spirit lacked shareholder support for approval of the Frontier merger, which was already on the table in February. Frontier then made a bid worth $2.4 billion, a bid that was quickly challenged by Jetblue who made a hostile bid.  

This has since been followed up with sweetened offers and Spirit chose to postpone the vote three times to give itself more time to negotiate the best deal for its shareholders. The company's final vote was scheduled to be held on July 15.

It ultimately ended with Jetblue emerging victorious from the tug-of-war in a deal worth $3.8 billion.

JetBlue will pay $33.50 per share in cash for Spirit, including an upfront payment of $2.50 per share if Spirit shareholders approve the deal and a ”ticking fee” of 10 cents per month starting next year until the deal closes.

The airlines wrote in a joint application that they expect the deal to be completed no later than the first half of 2024.

Spirit long preferred a merger with Frontier as it was assessed that the deal would have a greater chance with the competition authorities. 

Spirit must pay Frontier $25 million in merger-related costs due to the terminated agreement, according to Frontier.

The US Department of Justice has not yet commented on the Jetblue-Spirit deal. 

Spirit shares rise 4.2 percent on Wall Street, Jetblue drops 2.2 percent and Frontier surges over 18 percent. 

Source: DI.SE