The tussle to acquire Spirit Airlines (NK, Fort Lauderdale International) has intensified again in recent days, with JetBlue Airways (B6, New York JFK) sweetening its offer for the smaller rival budget carrier on June 6 in an attempt to derail a competing offer from Frontier Airlines parent Frontier Airlines Holdings.

Last month, JetBlue offered USD30 per share in cash to Spirit shareholders in a hostile takeover bid for the airline. Now, in an "all-cash premium" offer, it has upped the proposal to USD31.50 per share in cash, an offer that comprises USD30 per share in cash at the closing of the transaction plus a prepayment of USD1.50 per share as a reverse break-up fee, which would be paid soon after shareholders vote to approve the deal.

Coming ahead of a shareholder vote on June 10 on a competing offer from Frontier, JetBlue claimed it was offering Spirit stockholders "demonstrably superior value, more regulatory protections, and the prepayment of a portion of cash consideration."

Spirit had rejected JetBlue's previous offer because it claimed the deal would have a low chance of securing the approval of government regulators. JetBlue retorted that a deal with Frontier faced similar risk.

"JetBlue would provide a USD350 million reverse break-up fee, payable to Spirit in the unlikely event the transaction is not consummated for antitrust reasons. This represents an increase of USD150 million, or USD1.37 per Spirit share, to the reverse break-up fee JetBlue has previously offered to pay, and is USD100 million greater than the amount being offer by Frontier," JetBlue said.

JetBlue CEO Robin Hayes told the US business news broadcaster CNBC that his airline had made "unprecedented divestiture commitments" to achieve regulatory approval, Reuters news agency reported. "We know what it takes to get this deal done. We need the Spirit board to seriously consider our offer."

Although Hayes stressed in a statement that "combining JetBlue and Spirit would create a true national competitor to the dominant legacy carriers," his latest offer did not refer to the Northeast Alliance (NEA) partnership with American Airlines, which according to Spirit would scupper any deal with JetBlue due to antitrust concerns.

Last week, however, JetBlue announced that the advisory firm Institutional Shareholder Services (ISS) had issued a report urging Spirit shareholders to vote against the Frontier transaction at the upcoming meeting. JetBlue's previous offer was already superior from a financial standpoint, the ISS said on May 31.

The ISS report noted that "the [Spirit] board's view that a Frontier merger has a safer path to regulatory approval is not supported by any guarantee of value for shareholders in the event of regulatory rejection. Spirit's view that the Frontier proposal may have a smoother glide path towards achieving regulatory approval appears reasonable, but its assertion that the JetBlue proposal has zero chance of approval appears far less so."