‘everybody wins through this transaction’

Shares of Spirit Airlines Inc (NYSE: SAVE) are up more than 10% on Monday after Frontier Group Holdings Inc (NASDAQ: ULCC) said it will buy the Florida-based ultra-low-cost air carrier for $2.9 billion in cash and stock.

Spirit shareholders to get a 19% premium

The deal offers $2.13 in cash to Spirit shareholders on top of 1.9126 shares of Frontier. Together, this translates to $25.83 per share – a 19% premium on where SAVE closed on Friday. On CNBC’s “Squawk Box”, Spirit Airlines’ CEO Ted Christie said:

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We’ve been working on this since the latter part of last year. I think this combination makes a lot of sense. It’s really good for consumers, it’ll be good for shareholders, and also for our teams. For that reason, we’re really excited about it today.

Upon completion of the $6.6 billion transaction (including net debt and operating lease liabilities), expected in the back half of 2022, the combined company will be the country’s fifth-largest airline. Frontier shares are up 1.0% this morning.

Frontier CEO’s remarks on CNBC’s ‘Squawk Box’

The name of the new airline, where it will be headquartered, and who will be its chief executive is yet to be announced. During the same interview on CNBC, Frontier CEO Barry Biffle said:

I think what’s exciting for both shareholders is that everybody wins through this transaction. Consumers will win with a billion dollars in savings, our shareholders win with $500 million in synergies, and our team members win with 10,000 more direct jobs in the next few years.

According to the press release, the joint company will have $5.3 billion in annual revenue with more than 1,000 flights per day to over 145 destinations across 19 countries. It’ll have roughly $2.42 billion in cash.