Frontier Airlines‘ parent company on Thursday said it would pay a $250 million reverse breakup fee to Spirit Airlines if regulators don’t approve the planned combination of the two discount carriers for antitrust reasons, an effort aimed at convincing investors to approve the deal next week as rival JetBlue Airways tries to buy Spirit outright.
New York-based JetBlue offered $33 a share, or $3.6 billion cash for Spirit, in April, above the $2.9 billion cash-and-stock deal that Spirit and Frontier announced in February.
Spirit’s board rejected JetBlue’s advances, and JetBlue last month made a tender offer of $30 a share and has urged Spirit shareholders to vote against the deal.
Spirit said a deal with JetBlue wouldn’t likely be approved by regulators. JetBlue’s offer includes a $200 million reverse breakup fee if regulators don’t approve the acquisition.
On Tuesday, proxy advisory firm Institutional Shareholder Services advised Spirit shareholders to vote against the Frontier deal, raising concerns about the lack of a reverse termination fee.
Spirit’s shareholder meeting is set for June 10.