Frontier Airlines Will Pay $250 Million Fee If Spirit Merger Falls Through

Frontier Airlines has an offer to purchase Spirit Airlines.

Frontier will pay a $250 million fee if it fails to complete the acquisition of another discount carrier. The deal would allow stockholders to be more comfortable with the merger.

The offer was endorsed by the directors of both airlines according to Ted Christie. The unanimous support of the Spirit board will allow the stakeholders to vote on Frontier's offer.

The airlines tried to block the merger by offering more money than Frontier did. The government is scrutinizing the New York-based carrier's deal with American Airlines.

The carrier added a $200 million fee to its offer in order to get the shareholders to reject the Frontier offer. The $250 million fee was added by Frontier.

The amended deal resulted in a statement from the airline.

The conflicts of the board continue to guide their decisions. They should negotiate with us in good faith because today's announcement shows why. When it became clear that their shareholders would reject the flawed process and inferior transaction of the Spirit Board, they returned to Frontier.

In the face of a likely defeat, the reverse terminated fee was added to acknowledge that the regulatory profiles and timelines of both deals are similar. The previous projections of receiving approval were not accurate. Both transactions will be scrutinized the same way.

The revised merger agreement will be reviewed byJetBlue once it is available. We are willing to negotiate in good faith a consensual transaction at $33 if we receive necessary diligence. We encourage Spirit shareholders to let the board know that they want an open, fair process and full access to the same information as Frontier. There is still time for the board to act in the best interests of their shareholders.

International Shareholder Services advised Spirit stockholders to reject the Frontier offer because it offered more financial gain.

"On balance, a potential agreement with JetBlue would appear to offer shareholders superior optionality, allowing those concerned with the turbulence ahead to exit at a significant premium, while allowing those with a more optimistic outlook to reinvested the premium consideration," the report stated.