Frontier Airlines and spirit Airlines reached a new agreement on Thursday. If regulators prevent the merger of the two companies, Frontier Airlines will pay a $250million breakup fee to spirit airlines. The move comes at a time when spirit Airlines is trying to win investors' support for its merger with border airlines and resist the hostile takeover of rival JetBlue airlines.
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This also solves a problem raised this week by institutional shareholder services (ISS), an agency consulting firm. The company believes that the lack of such breakup fee is a key reason for its proposal that the shareholders of spirit Airlines vote against the transaction with Frontier Airlines.
In April this year, after spirit airlines announced that it had reached a deal with Frontier Airlines, JetBlue Airlines suddenly made an unexpected acquisition offer to spirit airlines. JetBlue has promised to pay a US $200million breakup fee if regulators block the transaction between JetBlue and spirit airlines.
The management of spirit Airlines said on Thursday that they believe that the additional fees should make it easier for shareholders to make decisions. According to the plan, the shareholders of the company will vote on the merger with Frontier Airlines next week.