(CTN News) – In the wake of JetBlue Airways indicating that it may withdraw from a proposed acquisition of Spirit Airlines, shares of the ultra-low-cost carrier continued to fall Friday morning.
As JetBlue warned in a filing with the Securities and Exchange Commission, there is a risk that “certain closing conditions” necessary for the merger to proceed will not be met before a certain date, JetBlue warned.
In view of this, the Merger Agreement may be terminated on or after January 28, 2024.”
The shares of Spirit Inc., based in Florida, have fallen $1.17 or 16.27% to $6.05 as of 10:54 a.m. Eastern Standard Time.
There was an increase of $0.07 or 1.3% in JetBlue’s shares from $5.40 to $5.41 at the same time.
Spirit believes that there is no basis for terminating the merger agreement, and it is expecting JetBlue to do the same. Spirit will continue to adhere to all of its obligations under the merger agreement, and it expects JetBlue to follow suit,” the company said in a separate filing with the Securities and Exchange Commission.
The news comes ten days after a federal judge blocked attempt to take over its rival, calling it an anti-competitive move.
In the wake of the court ruling, Spirit shares began to fall, reaching a low of $5.70 as early as January 18 after the court ruled. There has been a decline in the company’s stock price by 62.2% over the past three months.
It is estimated that the purchase price of the proposed takeover will be approximately $3.8 billion.
This deal, if it is successful, would create the fifth-largest airline in the United States, behind American Airlines, Delta, Southwest, and United Airlines.
Should the merger be terminated due to an inability to obtain regulatory approval, there would be a financial penalty attached. If this were the case, JetBlue would have to pay Spirit $70 million. Besides owing Spirit stockholders more than $400 million, the company would also be obligated to pay some costs to the stockholders.
The Justice Department announced earlier this month that JetBlue and American Airlines would wind down their partnership to avoid antitrust claims.