Judge Blocks Proposed JetBlue-Spirit Merger, Spirit Shares Tumble While JBLU Pops Intraday
U.S. District Judge William G. Young ruled to permanently enjoin the planned deal today.
(Massachusetts) U.S. District Judge William G. Young ruled today to permanently enjoin the $3.8 billion merger proposed by JetBlue Airways (NASDAQ: JBLU) and Spirit Airlines (NYSE: SAVE) on July 28, 2022, sending shares of Spirit tumbling mid-day while JBLU shares popped.
Photo courtesy of Eva Marie Uzcategui/Bloomberg via Bloomberg: JetBlue and Spirit airplanes at Fort Lauderdale-Hollywood International Airport in Florida..
Specifically, Judge Young’s ruling cited Section 7 of the Clayton Act, a 109-year-old statute that prohibits mergers and acquisitions where the effect “may be substantially to lessen competition, or to tend to create a monopoly.”
Shares of Spirit are currently trading below $7.50, more than 50% below today’s opening price of $15.05, while JetBlue shares are trading at $5.14, about 5% above the price of $4.90 at today’s open.
In his decision to side with the federal government, Judge Young said that the prospective merger would essentially prove harmful to the public from the standpoint of price competitiveness – given the would-be elimination of the United States’ dominant deep-fare discount airline – and would likely ultimately drive up prices across the industry, according to Bloomberg.
“Spirit is a small airline," Young wrote in his decision. "But there are those who love it. To those dedicated customers of Spirit, this one’s for you. Why? Because the Clayton Act, a 109-year-old statute requires this result –- a statute that continues to deliver for the American people."
** Not investment advice; The FLY Report is not a registered investment advisor.
