Spirit Mergers and Acquisitions Presentation Deck
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A Frontier
Transaction
A JetBlue
Transaction
Let's Use Common Sense
The Expected Outcome
Strong Regulatory Case
Ultimate Outcome:
Substantial Value Creation
vs. Status Quo
Very Low Transaction
Certainty
Ultimate Outcome:
Value Destruction vs.
Status Quo
A "Common Sense" Scenario Matrix
The Common Sense
Strong Regulatory Case: A Spirit / Frontier merger is pro-consumer,
delivering more ultra-low fares in more places, with $1B+ of annual
consumer savings
Substantial Value Creation:
●
Stock merger provides Spirit shareholders exposure to full
pandemic recovery (in early innings) and continued airline growth
●
• $500MM of annual run-rate operating synergies represents potential
incremental value of ~$15+ per share to Spirit shareholders(¹)
× Very Low Certainty: JetBlue is already in litigation with DOJ over the
NEA and, at its core, a JetBlue transaction would substantially raise
fares for consumers - how could that be approved?
× Value Destruction: RTF of $1.83 per share does not come anywhere
close to protecting Spirit shareholders from the business disruption
of a botched M&A transaction: average market underperformance of
(25%) experienced by targets of failed mergers(2)
Source: Capital IQ.
1. Illustrative value per share based on Spirit shareholder's 48.5% share of illustrative market value of run-rate operating synergies of $500MM, calculated at 10x P/E ratio assuming an
effective tax rate of 22.7%, less one-time costs to achieve of $400MM, divided by current fully diluted shares outstanding.
2. Based on U.S. public transactions announced since 2016 that were withdrawn after >1 year due to lack of regulatory approvals. Target share price performance measured from
unaffected date to one day following transaction withdrawn date, measured relative to performance of S&P 500 over same time period.
JetBlue's Unrealistic Regulatory
Analysis Results in an Illusory Offer
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