(Spirit Airlines) Shares of American low-cost carrier Spirit Airlines rose more than 12% on Monday after agreeing to a $6.6 billion merger deal with Frontier Airlines.
Spirit president and CEO Ted Christie says the deal aims to create an aggressive ultra-low-cost airline that is more competitive and inclined to offer consumer-friendly fares.
Following the merger, Frontier will hold a 51.5% controlling stake in the combined entity, which is expected to become the fifth-largest airline in the US. Spirit investors will get 1.9126 shares of Frontier and $2.13 in cash for each share they own.
Spirit shareholders will get an implied value of $24.83 per share after the deal, about a 19% premium to the value of the company’s shares at the end of last week.
The merger happens after Spirit’s aggressive expansion in the past decade, with plans to continue the strategy after the deal.
Spirit and Frontier held a combined market share of 5.4% by 2019, an increase from just 2.8% in 2013.
SAVE: NYSE is up +12.61%, ULCC: NASDAQ is down -1.69%.
