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Summary
- JetBlue offered to buy Spirit Airlines at $33.5/share, but the DoJ filed a complaint to block the acquisition.
- The market shows skepticism about the deal, with Spirit’s stock trading well below the deal price.
- My analysis suggests that JetBlue has a slightly stronger case, with winning odds estimated at around 60% (vs. 29% odds implied by the market).
Background
In a bidding war to acquire Spirit Airlines (NYSE:SAVE), JetBlue (NASDAQ:JBLU) won Spirit shareholders’ votes with a superior proposal (to Frontier’s) at a cash offer of $33.5/share (up to $34.15/share) in July 2022.
The DoJ filed the complaint in Mar 2023 to block JetBlue’s proposed Spirit acquisition. The trial started on Oct 30, slated to end in early Dec. Judge Young signaled his intent to move expeditiously and targeted to rule on the trial shortly after.
Spirit’s disappointing 3Q23 results and unexpected plane grounding due to an RTX engine issue sent its share price down significantly in recent months, currently at $13/share.
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