The most recent improvement within the saga that’s the proposed acquisition of Spirit Airways (SAVE 4.50%) by peer JetBlue Airways (JBLU -1.23%) gave the previous firm’s traders hope on Wednesday. Particularly, this was the reassignment of a authorities lawsuit on the deal to a brand new choose. The market reacted by bidding Spirit’s replenish a chunky 4.5% on the day.
The lawsuit, which has been filed by the Justice Division on antitrust grounds, might be presided over by U.S. District Decide William Younger in Boston. What’s encouraging for Spirit traders is that Younger has a repute for dashing lawsuits to trial. This guarantees a comparatively quick decision to the matter, versus a tricky, dragged-out, and exhausting authorized struggle.
On Tuesday, Justice, along with the states of Massachusetts and New York, plus the District of Columbia, filed its antitrust lawsuit. It alleges, “By eliminating that competitors and additional consolidating the US airways business, the proposed transaction will enhance fares and scale back selection on routes throughout the nation, elevating prices for the flying public and harming cost-conscious fliers most acutely.”
In July 2022, Spirit agreed to the deal, wherein JetBlue would purchase the price range airline for $33.50 per share in an all-cash acquisition. The deal’s fairness worth is $3.8 billion.
JetBlue specifically has signaled that it’s prepared to compromise, so maybe the sensible cash is betting on a decision in favor of the acquisition. But it is not protected to imagine the 2 firms will prevail, notably when going through off in courtroom towards decided state and federal governments with huge assets.
With all this in thoughts, traders ought to be cautious right here.
Eric Volkman has no place in any of the shares talked about. The Motley Idiot recommends JetBlue Airways. The Motley Idiot has a disclosure policy.