Spirit Airlines Inc (NYSE:SAVE) and Frontier Group Holdings Inc (NASDAQ:ULCC), the parent company of Frontier Airlines, Inc., have agreed to combine, creating a competitive ultra-low fare airline.
- The transaction implies a value of $25.83 per Spirit share, representing a premium of 19% over the February 4, 2022 closing price of Spirit.
- Spirit equity holders will receive 1.9126 shares of Frontier plus $2.13 in cash for each existing Spirit share they own.
- The transaction values Spirit at an equity value of $2.9 billion and a transaction value of $6.6 billion (with the assumption of net debt and operating lease liabilities).
- The combined airline is expected to increase access to low fares by adding new routes to underserved communities across the U.S., Latin America, and the Caribbean.
- The existing Frontier equity holders will own ~51.5%, and existing Spirit equity holders will own ~48.5% of the combined airline.
- The combined company would have annual revenues of ~$5.3 billion based on 2021 results and have a strengthened financial profile.
- Once combined, Frontier and Spirit expect to deliver annual run-rate operating synergies of $500 million.
- The combined airline is expected to deliver $1 billion in annual consumer savings and offer more than 1,000 daily flights to over 145 destinations in 19 countries.
- By 2026 Spirit and Frontier expect to add 10,000 direct jobs and thousands of additional jobs at the companies' business partners.
- The board will be comprised of 12 directors, seven from Frontier and five from Spirit. William Franke will be Chairman of the board of the combined company.
- The merger is expected to close in the second half of 2022.
- Price Action: SAVE shares are trading higher by 11.1% at $24.15 and ULCC lower by 3.39% at $11.97 during the premarket session on Monday.
