Spirit Airlines Inc. SAVE, +0.18% and Frontier Group Holdings Inc. ULCC, -1.43% said Monday they have agreed to merge in a cash-and-stock deal valued at $6.6 billion including net debt and operating lease liabilities. Under the terms of the deal, Spirit shareholders will receive 1.9126 Frontier shares plus $2.13 in cash for each share owned, equal to a value of $25.83 per Spirit share at Frontier’s closing stock price on Friday. That is equal to a premium of 19% over Spirit’s closing price Friday and a 26% premium over the 30 trading-day volume-weighted average prices of Frontier and Spirit. The deal values Spirit at a fully diluted equity value of $2.9 billion. The merger is expected to close in the second half and to create a leading U.S. low-fare airline. “Together, Frontier and Spirit expect to change the industry for the benefit of consumers, bringing more ultra-low fares to more travelers in more destinations across the United States, Latin America and the Caribbean, including major cities as well as underserved communities,” the companies said in a joint statement. The deal is expecting to deliver $1 billion in annual consumer savings, to offer more than 1,000 daily flights to more than 145 destinations in 19 countries and to create 10,000 direct jobs by 2026. The combined company will have annual revenue of about $5.3 billion, based on 2021 results. The company expect annual run-rate operating synergies of about $500 million once integration is completed. It will have a cash balance of about $2.42 billion as of year-end 2021. Spirit shares soared 13% premarket, while Frontier shares were down 2%, reversing earlier gains.
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