Frontier Airlines and Spirit Airlines, the two largest discount carriers in the U.S., have agreed to merge in a deal valued at $6.6 billion, creating what would become the fifth-largest airline in the country. The merger gives Airlines a 51.5% controlling stake in the combined airline.Spirit investors will receive 1.9126 shares of Frontier plus $2.13 in cash for each share they own, giving Spirit shareholders an implied value of $25.83 per share, which is a 19% premium over the value of Spirit shares the end of last week, the companies said.
Ted Christie, CEO of Miramar, Fla.-based Spirit, said that the transaction is centered around creating an aggressive low-fare competitor that will better serve guests, expand career opportunities for our team members and generate value for our shareholders. They believe that they are a perfect fit with Frontier. Our businesses share similar values, including our long-standing commitment to affordable travel.
Spirit’s shares soared more than 17% after the deal was announced, closing at $25.46, while Frontier ended the day $12.82 up 3.5%. Frontier Chairman Bill Franke, a longtime discount airline investor, and executive will chair the combined company, which he said will create America’s most competitive ultra-low fare airline for the benefit of consumers.
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