Spirit Airlines (SAVE) shares slip as Frontier Airlines raises its takeover bid

Frontier Group (NASDAQ:ULCC) has just increased the cash portion of its bid to buy off the discount carrier’s colleagues Spirit Airlines (NYSE:SAVE). This makes Frontier’s offer more competitive JetBlue Airways’ (NASDAQ:JBLU) preliminary offer. This is starting to look like a war for bids – but SAVE’s stocks have fallen since the revelation of Frontier’s revised bid.

Earlier this month, JetBlue corrected its redemption offer so that Spirit shareholders would receive $ 31.50 per share in cash if the deal went. As a result, JetBlue’s offer would be worth a whopping $ 3.4 billion. Not only that, JetBlue has added $ 150 million to its proposed reverse divorce commission, which is $ 350 million. That money would be paid to Spirit Airlines shareholders if the deal failed due to antitrust issues.

It was an obvious example of one supremacy. Frontier had previously proposed paying $ 250 million for the breakup. It is now clear that Frontier is ready to meet or even exceed JetBlue’s offer. Actually Frontier added $ 2 per share in its latest offering, making a new offer of $ 4.13 per share. In addition, Frontier increased its proposed divorce fee by $ 100 million to $ 350 million, achieving JetBlue.

What’s going on with SAVE Stock?

As you can see, the virtual war of bids is really heating up. The situation could reach a tipping point this week, like Spirit shareholders continued to vote on the proposed agreement with Frontier Group on Thursday.

But the competition is not just heated – it is getting fierce. A recently issued letter to Frontier shareholders described JetBlue’s offer as “illusory”. The letter also claimed that JetBlue’s proposal “lacks any realistic likelihood of obtaining regulatory approval.”

Perhaps Wall Street on Monday expresses disapproval of Frontier’s sharp tone. At 10:15 EST, Frontier shares had already fallen 10%. It is interesting, however, that SAVA shares also fell sharply. Due to the high volume of trading, Spirit Airlines shares fell 8% that morning.

This also happens after a proxy consulting company ISS recommended the Frontier-Spirit deal over the weekend. “Overall, support for the merger with Frontier is justified under the revised terms,” the ISS assured.

It is possible that the SAVE stock would return when the dust settles. For now, however, the proposed takeover bids are still up in the air and apparently some retailers are not too happy with this.

On the day of publication David Moadel did not hold (directly or indirectly) any positions in the securities referred to in this Article. The opinions expressed in this article are those of the author who are the subject of InvestorPlace.com Guidelines for publication.