Frontier Group Holdings Inc. agreed to buy Spirit Airlines Inc. for $2.9 billion in cash and stock, uniting two ultra-low-cost carriers targeting the recovering U.S. leisure-travel market.
Spirit investors will receive 1.9126 Frontier shares and $2.13 in cash for each Spirit share, according to a statement Monday. The deal implies a value of $25.83 a share for Spirit, a 19% premium based on closing prices on Feb. 4.
The combination will bring Spirit back into the constellation of ultradiscounters led by William A. Franke, the managing partner of private equity firm Indigo Partners. Leisure travel has recovered more quickly from the slump caused by the coronavirus, and the ultra-low-cost carriers, with an unrelenting focus on fares and expenses, stand to grow quickly as travel normalizes.
Spirit, based in Miramar, Florida, and Denver-based Frontier share complementary cultures, fleets and geographical footprints, Spirit Chairman Mac Gardner said in the statement.
“This combination is all about growth, opportunities and creating value for everyone — from our guests to our team members to the flying public at large,” he said.
Spirit jumped 11% before the start of regular trading in New York. Frontier fell 3.7%.
Frontier holders will own 51.5% of the combined company and name seven of the 12 directors, including Franke as chairman. Executive appointments will be decided later.
Indigo Partners owns a majority stake in Frontier, and owns low-cost carriers including Hungary’s Wizz Air Holdings Plc, Chile’s JetSmart Airlines SpA and Mexico’s Volaris Aviation Holding.
The four carriers placed a big bet on growth with a 255-plane combined order at the Dubai Air Show in November.
—With assistance from Siddharth Philip.
More Must-Reads From TIME
- Meet the 2024 Women of the Year
- Greta Gerwig's Next Big Swing
- East Palestine, One Year After Train Derailment
- In the Belly of MrBeast
- The Closers: 18 People Working to End the Racial Wealth Gap
- How Long Should You Isolate With COVID-19?
- The Best Romantic Comedies to Watch on Netflix
- Want Weekly Recs on What to Watch, Read, and More? Sign Up for Worth Your Time
Contact us at firstname.lastname@example.org