Advisory Firm Switches Gears, Tells Spirit to Accept Frontier Deal

What a difference three weeks makes, hey?

On the heels of Frontier Airlines sweetening its offer on Friday to merge with Spirit Airlines, independent proxy advisory firm Institutional Shareholder Services (ISS) has suddenly reversed course.

The company initially advised Spirit Airlines shareholders earlier this month to accept the JetBlue takeover bid when a meeting was scheduled for June 10 to vote on the proposals. After a back and forth among the two suitors in which they counteroffered and raised the stakes, Spirit postponed the vote until Thursday, June 30.

But following Frontier’s announcement last week of a revised offer, ISS is now advising Spirit shareholders to vote “Yes” on the Frontier merger.

This recommendation follows a June 3 report from Glass, Lewis & Co., another leading independent proxy advisory firm, also recommending that stockholders vote for the proposed merger with Frontier.

“We are very pleased that both leading proxy advisory firms – ISS and Glass Lewis – recommend that stockholders vote in favor of our merger with Frontier,” Ted Christie, President and CEO of Spirit, said in a statement. “We are especially grateful to our Team Members who have stayed focused on providing the best experience for our Guests while the Board conducted its process, arriving at the best possible outcome for Spirit and its stockholders. We look forward to our stockholder vote on June 30 and continuing our ongoing discussions with regulators as we advance toward completing the transaction and delivering on the value of this combination for our stockholders, Team Members and Guests.”

Christie urged all shareholders to be sure to vote.

“While we appreciate the great support from Spirit stockholders who have voted, we remind all Spirit stockholders that not voting will have the same effect as a vote against the merger. To ensure your vote is counted, vote FOR the transaction on the WHITE proxy card,” he said.

In its report, ISS wrote that “[…] shareholders are best served by taking the deal that provides the best combination of long-term value and compensation in the event of regulatory rejection. […] Given these facts and circumstances, the current offer from Frontier appears preferable as it matches JetBlue’s $350 million protection against regulatory failure, matches the $2.00 increase in JetBlue’s offer price, provides a higher prepayment of $2.22 per share compared to $1.50 per share from JetBlue, and allows Spirit shareholders to benefit from the potential upside of the combined company and the expected $500 million of synergies.”