Spirit and Frontier to Merge

[roundout]

Not really. They become jetBlue of 2016. Wanted a dance partner, left stranded.

If you think Bill Franke hasn't planned out a response to, well, pretty much anything, you aren't paying attention. I guarantee he knew this was a possibility and has an array of reactions ready to go (up the offer, walk away, some other type of business transaction that NONE of us button-smashers really understand, etc.).

go to work, fly, come home, collect big check, repeat" mentality instead of worrying about things I have zero control over

This is the way.

 

[Cherokee_Cruiser]

If you think Bill Franke hasn't planned out a response to, well, pretty much anything, you aren't paying attention. I guarantee he knew this was a possibility and has an array of reactions ready to go (up the offer, walk away, some other type of business transaction that NONE of us button-smashers really understand, etc.).



This is the way.

Publicly, Frontier has been pretty dead quiet about jetBlue's efforts on purchasing Spirit. Nor has Frontier upped their offer.

 

[roundout]

Publicly, Frontier has been pretty dead quiet about jetBlue's efforts on purchasing Spirit. Nor has Frontier upped their offer.

Exactly.

 

[Cherokee_Cruiser]

Exactly.

It's dumb.

No offense to how good the Frontier-Spirit deal sounds, as a shareholder, I want the max return on my investment and I'd be okay with 33/share. Maximized shareholder return was why our shop went away to AS instead of jetBlue. I'm very surprised they are going with the inferior offer. The inferior offer at 55/share for VX made much more sense for jetBlue and VX. Same fleet, similar business model, completely complementing network, TV screens, easy integration for employee group. Instead, the max shareholder return was 2/share more and that is why it went to AS.

And all this talk about B6/NK not being approved is just hype. The DOJ isn't going to do jack, just some givebacks on their NEA and a few minor concessions (same as the minor stuff VX had to give up) and this will go through in a New York minute.

 

[amorris311]

It's dumb.

No offense to how good the Frontier-Spirit deal sounds, as a shareholder, I want the max return on my investment and I'd be okay with 33/share. Maximized shareholder return was why our shop went away to AS instead of jetBlue. I'm very surprised they are going with the inferior offer. The inferior offer at 55/share for VX made much more sense for jetBlue and VX. Same fleet, similar business model, completely complementing network, TV screens, easy integration for employee group. Instead, the max shareholder return was 2/share more and that is why it went to AS.

And all this talk about B6/NK not being approved is just hype. The DOJ isn't going to do jack, just some givebacks on their NEA and a few minor concessions (same as the minor stuff VX had to give up) and this will go through in a New York minute.

Have you submitted your demand letter to the Spirit BOD yet? That would be a good start to answer some of the questions I am sure you have as a shareholder.

Assuming you have not, the Spirit BOD has the responsibility to examine all offers and take what is best for all shareholders. Not doing so opens the members of the Board up to a host of litigation. Delaware Chancery court has several seminal rulings on how Boards must respond to the offers and I’m certain the lawyers representing Spirit are keenly aware of their duties and have made them known to the members.

If you want to have a lot of fun take a look at Unocal and Revlon lawsuits from the mid 70’s in Delaware. That will, at the very least, give you a good baseline and understanding as to how the members of the Board have to analyze offers.

 

[Cherokee_Cruiser]

Have you submitted your demand letter to the Spirit BOD yet? That would be a good start to answer some of the questions I am sure you have as a shareholder.

Assuming you have not, the Spirit BOD has the responsibility to examine all offers and take what is best for all shareholders. Not doing so opens the members of the Board up to a host of litigation. Delaware Chancery court has several seminal rulings on how Boards must respond to the offers and I’m certain the lawyers representing Spirit are keenly aware of their duties and have made them known to the members.

If you want to have a lot of fun take a look at Unocal and Revlon lawsuits from the mid 70’s in Delaware. That will, at the very least, give you a good baseline and understanding as to how the members of the Board have to analyze offers.

But isn’t the “best” the highest offer in this particular case? What happens to NK afterward isn’t their concern since it’s a cash out offer, the only thing that matters is can it be approved and go through.

Maybe I’m just reflecting from our deal. All I know is B6 went to $55/hr and AS went to $57/share. And it sold to AS. No one said hey it’s a different fleet, or an entirely different brand model, TV screens, different customer base, etc.

At the end, we ditched (ditching) all Airbuses. NYC base closed. East coast flying to other than CA/WA/OR abandoned. LGA abandoned. TV screens abandoned. Literally everything abandoned. This is what B6 envisions doing with Spirit, killing off the Spirit brand and making them all JetBlue. Wasn’t a hurdle before, why would it be a hurdle now? Are we really to believe that the DOJ will stop JetBlue and Spirit?

 

[Maximilian_Jenius]

...you seem to be personally attacked, by all of this.

 

[roundout]

It's dumb.

No offense to how good the Frontier-Spirit deal sounds, as a shareholder, I want the max return on my investment and I'd be okay with 33/share. Maximized shareholder return was why our shop went away to AS instead of jetBlue. I'm very surprised they are going with the inferior offer. The inferior offer at 55/share for VX made much more sense for jetBlue and VX. Same fleet, similar business model, completely complementing network, TV screens, easy integration for employee group. Instead, the max shareholder return was 2/share more and that is why it went to AS.

And all this talk about B6/NK not being approved is just hype. The DOJ isn't going to do jack, just some givebacks on their NEA and a few minor concessions (same as the minor stuff VX had to give up) and this will go through in a New York minute.

I’m sure the Spirit BOD has taken in to consideration everything that you’ve identified (and more!)

 

[Cherokee_Cruiser]

I’m sure the Spirit BOD has taken in to consideration everything that you’ve identified (and more!)

…everything except the financially superior payoff. $33/hr original cash out offer was much higher than Frontier’s one time $2.13/share payout and conversion of 1.9126 to Frontier shares.

 

[roundout]

…everything except the financially superior payoff. $33/hr original cash out offer was much higher than Frontier’s one time $2.13/share payout and conversion of 1.9126 to Frontier shares.

you’re seriously positioning as having more knowledge of the financial transaction taking place* than the financial gurus who are paid much more than any of us to analyze the deal?

*probably

Bro.

 

[Cherokee_Cruiser]

you’re seriously positioning as having more knowledge of the financial transaction taking place* than the financial gurus who are paid much more than any of us to analyze the deal?

*probably

Bro.

View attachment 64852

No. I’m going by the publicly released (required disclosure) financial terms offered to the shareholders.

jetblue - 33/share original
Frontier - 2.13/share + 1.9126 conversion to ULCC

 

[amorris311]

But isn’t the “best” the highest offer in this particular case? What happens to NK afterward isn’t their concern since it’s a cash out offer, the only thing that matters is can it be approved and go through.

I do not know the specifics of either offer. There is what is reported in news outlets but it does not give specifics. For example, let’s say Co. A offers to buy Spirit at $50 a share. However, the terms state they will buy the first 50% of those shares for cash then the next 50% will be through bonds. Now Co. B comes along and offers to buy at $52 a share but only the first 40% then the next 30% is at market rate, then the next 30% is in bonds. Which one is the better offer in this exercise?

These deals are complex and have plenty of contingencies that never or do not get reported or made public. If I were to guess the Fontier deal is probably better for more shareholders than the JB deal. Just because you read what they claim they will buy the stock at is not the whole picture. This is why the BOD has a fiduciary responsibility to weigh all the factors and make the most prudent choice for their current shareholders.

I am over simplifying this just to help paint a picture for you. This is not unique to this merger and once terms become public you’ll be able to hone in and focus on why the Spirit BOD made the decisions they did.

 

[zmiller4]

you’re seriously positioning as having more knowledge of the
financial transaction taking place* than the financial gurus who are paid much more than any of us to analyze the deal?

Are you surprised by this at all?

No. I’m going by the publicly released (required disclosure) financial terms offered to the shareholders.

jetblue - 33/share original
Frontier - 2.13/share + 1.9126 conversion to ULCC

And the Spirit board clearly thinks that there’s better value in the latter than the former.

In what should be a surprise to absolutely no one, you’re simply looking at how much you as a shareholder stand to make right now instead of the potential of the combination of the two companies.

 

[amorris311]

… you’re simply looking at how much you as a shareholder stand to make right now instead of the potential of the combination of the two companies.

That’s the idea I am trying to get him, and I’m sure others, to realize. Unless he has specific details to the offer there is no real firm ground for people to say whether the BOD is making the right decision or not.

The first step is to hire a lawyer to write up a demand letter. This is the first step in a long process to see whether the BOD is failing in their duty of care to Spirit as a corporation.

 

[roundout]

No. I’m going by the publicly released (required disclosure) financial terms offered to the shareholders.

jetblue - 33/share original
Frontier - 2.13/share + 1.9126 conversion to ULCC

You’re focusing one thing. A financial transaction of this magnitude is a Breitling watch. To the customers of one of these companies, it’s more like a Casio from Walmart, but play along. You’re looking at the face of the watch to see what time it is. But you’re not seeing the finely-crafted Swiss action, with all the flywheels, gears, and springs which make the hands move.

 

[Cherokee_Cruiser]

I guess that’s why I’m surprised. I’m simply a product of the last airline merger. NO financial entity cared two craps what the “final better value” or “potential combination” is. It was STRICTLY financial.

Can any of you really make the argument how AS and VX was a stronger combo than B6 and VX? It’s not even close. Closest company to B6 was VX. Most complementing network. Same fleet. Same product. Same customer base.


Yet, we were all told their “fiduciary duty” demanded they take the stronger financial offer on the table, to “maximize shareholder return.”



That’s why I’m using the same logic. Because using Spirit and Frontier logic, they are saying yeah we’ll go with the 55/share offer instead of the stronger 57/share offer. I guess this is shattering my view of the merger. Maybe we were lied to.

 

[amorris311]

I guess that’s why I’m surprised. I’m simply a product of the last airline merger. NO financial entity cared two craps what the “final better value” or “potential combination” is. It was STRICTLY financial.

Can any of you really make the argument how AS and VX was a stronger combo than B6 and VX? It’s not even close. Closest company to B6 was VX. Most complementing network. Same fleet. Same product. Same customer base.


Yet, we were all told their “fiduciary duty” demanded they take the stronger financial offer on the table, to “maximize shareholder return.”



That’s why I’m using the same logic. Because using Spirit and Frontier logic, they are saying yeah we’ll go with the 55/share offer instead of the stronger 57/share offer. I guess this is shattering my view of the merger. Maybe we were lied to.

You logic is emotionally based. I’ve given you two very important cases so you can review and understand why BOD’s do what they do. Not many shareholders care about what type of airplane is flown, they care that their best interests were kept in focus during the deliberations of the BOD.

You may not “personally” like the end result but there is certainty the shareholders, as a whole, are receiving the best result.

Just go read those cases and maybe it will give you some perspective and answer a lot of your questions and misunderstandings.

 

[zmiller4]

That’s the idea I am trying to get him, and I’m sure others, to realize. Unless he has specific details to the offer there is no real firm ground for people to say whether the BOD is making the right decision or not.

The first step is to hire a lawyer to write up a demand letter. This is the first step in a long process to see whether the BOD is failing in their duty of care to Spirit as a corporation.

My company got bought 3 years ago for almost $60 billion. There were actually multiple competing offers, one from a larger (huge!) company and one from a smaller (slightly less huge) one. The smaller one’s offer was significantly higher in total valuation, but our board said no because they thought benefits to shareholders would be greater with the larger company’s (lower) offer.

The smaller company went out and got funding from Berkshire Hathaway and made an even better offer that our board couldn’t refuse. And it’s worked out well for us. I think I’ve been way happier with our new overlords than I would have been with our other suitor.

Moral: we worker bees don’t really know what tf is going on at our own companies, and CC surely has more of a clue what’s good for his spirit shares in the long term than the spirit board.

 

[Cherokee_Cruiser]

You logic is emotionally based. I’ve given you two very important cases so you can review and understand why BOD’s do what they do. Not many shareholders care about what type of airplane is flown, they care that their best interests were kept in focus during the deliberations of the BOD.

You may not “personally” like the end result but there is certainty the shareholders, as a whole, are receiving the best result.

Just go read those cases and maybe it will give you some perspective and answer a lot of your questions and misunderstandings.

I’ll look at those cases.

In our case, it was an outright cash buyout. As in, both offers were outright cash. I think that’s the difference. They must think the difference of getting 1.926 ULCC shares for 1 SAVE stock is greater for the long run, instead of 33/share now.

I’d still rather get $33/share now, instead of a potential 1.9126 of frontier. These mergers always talk a game of synergies but it takes years and years to realize them. Not to mention, if F9 and SAVE go through, there will base(s) closures and consolidation. Realization gains will take take time. One shouldn’t underestimate their potential ability to screw it up.

 

[amorris311]

I’ll look at those cases.

In our case, it was an outright cash buyout. As in, both offers were outright cash. I think that’s the difference. They must think the difference of getting 1.926 ULCC shares for 1 SAVE stock is greater for the long run, instead of 33/share now.

I’d still rather get $33/share now, instead of a potential 1.9126 of frontier. These mergers always talk a game of synergies but it takes years and years to realize them. Not to mention, if F9 and SAVE go through, there will base(s) closures and consolidation. Realization gains will take take time. One shouldn’t underestimate their potential ability to screw it up.

Well if that is your logic then I would get off JC and start looking at ways to get >26% of the shareholders, who agree with your logic, together and contact the BOD. That’s honesty your best option at this point to get what you want.

Others here have said it already, but these deals are complex and there are more qualified people/firms looking and running scenarios that give the Spirit BOD plenty of information to make an informed decision.