Speculation of Spirit’s Demise is Misguided – Merger Arbitrage Mondays

  • January 22, 2024

Spirit Airlines (SAVE): $6.68

Market Cap: $729.24 million

Enterprise Value: $6.4 billion

Last week for difficult for arbitrageurs that participate in deals with large spreads on two fronts. Not only did a judge rule against the acquisition of Spirit Airlines (SAVE) by JetBlue (JBLU) but the European Union indicated that it plans to block the acquisition of iRobot (IRBT) by Amazon (AMZN).

Spirit saw its stock drop from $14.97 on January 12th to $5.70 just three trading sessions later before rebounding 17% on Friday. The heavy volume shown in the chart below and the subsequent rebound on Friday indicate most of the forced selling is likely done at this point. As we mentioned a few weeks ago, Spirit Airlines was conspicuously missing from the portfolios of several arbitrage funds that I follow that tend to hold concentrated portfolios.

Spirit Airlines One Month Performance ChartThe stock continued to go up after hours on Friday after the companies indicated that they had  jointly filed a notice of appeal. While this might appear like a ray of hope, the probability of a win is very small. The language in the press release saying they were going through with the appeal “consistent with requirements of the merger requirements” indicates that they don’t expect to win the appeal.

The more interesting development on Friday was Spirit providing a preliminary fourth quarter update where it not only indicated that preliminary Q4 2023 results appear to be stronger than the company had anticipated both on the revenue and expenses front but that they are taking steps to shore up their liquidity.

Spirit ended 2023 with $1.3 billion of liquidity, completed a sale-leaseback transaction in January 2024 that allowed the company to pay back $140 million on debt and generate additional cash proceeds of $99 million. It also expects its negotiations with Pratt & Whitney regarding the problems with their engines that led to the grounding of certain Airbus A320neo aircraft to generate additional liquidity in the next two years.

If the appeal to overturn the judge’s decision fails, then Spirit will also collect a small portion of the termination fee that JetBlue hasn’t already paid to Spirit shareholders as a monthly ticking fee. This $70 million fee is referred to as the “Additional Parent Regulatory Fee” in the merger agreement and is subject to certain conditions.

A large portion of the drop in Spirit last week was not just because of forced selling by arbitrageurs who wanted to get out of the position after the judge ruled against the merger but also because rumors surfaced that the company was looking into restructuring its debt. Some investors translated that restructuring to mean that the company was potentially exploring a bankruptcy filing. The dual releases on Friday about Q4 2023 results and how the company already shored up its liquidity through sale-leaseback transactions, lays that bankruptcy theory to rest for now.

Spirit’s situation and that of the ultra low cost segment airline industry has deteriorated significantly since we first wrote about the company and added it to the model portfolio in September 2022. Over the last two years, Frontier Group (ULCC) and Allegiant (ALGT) are both down 65% and 58% respectively compared to a 69% drop in Spirit. Once the $3.80 in cash paid by JetBlue on shareholder approval and the monthly ticking fee of $0.10 is taken into account, Spirit has performed better than Frontier. The legacy carriers, with the exception of Alaska (ALK), which is down 35% over the last two years, have performed better.

I don’t know if the sector dynamics will change going forward but the selling in Spirit was overdone last week and the rebound in the stock is likely to continue this week. The Spirit options related trade that Shailesh discussed in this Yield Guru article worked out very well and options (with all their inherent risks and drawbacks) appear to be a better instrument to use in a highly volatile situation like Spirit going forward as well.

M&A activity increased last week with eight new deals announced and one deal completed.

You can find all the active deals listed below in our Merger Arbitrage Tool (MAT) which automatically updates itself during market hours.

Merger Arbitrage

Deal Statistics:

Total Number of Deals Closed in 20246
Total Number of Deals Not Completed in 20242
Total Number of Pending Deals
Cash Deals42
Stock Deals21
Stock & Cash Deals3
Special Conditions8
Total Number of Pending Deals74
New Deals Announced in 2024$81.62 billion

New Deals:

  1. ANSS: The acquisition of Ansys (ANSS) by Synopsys (SNPS) for a closing value of $35 billion in a cash plus stock deal. Under the terms of the agreement, Ansys shareholders will receive $197.00 in cash and 0.3450 shares of Synopsys common stock for each Ansys share.
  2. TAST: The acquisition of Carrols Restaurant Group (TAST) by Restaurant Brands International (QSR) for a closing value of $1 billion or $9.55 per share in an all-cash transaction.
  3. HMSTThe acquistion of HomeStreet (HMST) by FirstSun Capital Bancorp (FSUN) for a closing value of $277.15 million or $14.75 per share.  Under the terms of the agreement, the companies will combine in an all-stock transaction in which HomeStreet shareholders will receive 0.4345 of a share of FirstSun common stock for each share of HomeStreet common stock which represents a value of $14.75 per share.
  4. PGTIThe acquisiton of PGT Innovations (PGTI) by MITER Brands for approximately $3.1 billion or $42.00 per share in cash. PGT Innovations announced that it has terminated its merger agreement with Masonite International (DOOR) dated December 17, 2023.
  5. TARO: The acquisition of Taro Pharmaceutical Industries (TARO) by Sun Pharmaceutical Industries for a closing value of $257.34 million or $43 per share in cash.
  6. MDCThe acquistion of M.D.C. Holdings (MDC) by Sekisui House (SKHSY) for a closing value of $4.83 billion or $63 per share in cash.
  7. KAMN: The acquisition of Kaman Corporation (KAMN) by Arcline Investment Management for a closing value of approximately $1.8 billion or $46 per share in cash.
  8. TCN: The acquisition of Tricon International  (TCN) by Blackstone for a closing value of approximately $3.5 billion or $11.25 per share in cash.


  1. ROVR: On January 16, 2024, Rover Group (ROVR) announced that the waiting period under the HSR Act expired in connection with the previously announced proposed merger with Blackstone.
  2. CERE: On January 18, 2024, Cerevel Therapeutics (CERE) and  AbbVie (ABBV) following discussions with the FTC, voluntarily withdrew the initial HSR Act notification and refiled a new HSR Act notification.  The waiting period under the HSR Act is set to expire on February 16, 2024.
  3. ICVX: On January 19, 2024, Icosavax (ICVX) and AstraZeneca (AZN) withdrew its filing for HSR approval and refiled a new HSR Act notification.  The waiting period under the HSR Act is set to expire on February 16, 2024.
  4. CNSL: Consolidated Communications (CNSL) announced that Institutional Shareholder Services  has recommended that Consolidated shareholders vote “FOR” the proposed acquisition of the Company by affiliates of Searchlight Capital Partners and British Columbia Investment Management.


  1. ACI: Washington state Attorney General Bob Ferguson sued to block the proposed merger of Kroger (KR) and Albertsons (ACI).
  2. SAVE: A federal judge blocked the proposed acquisition of Spirit Airlines (SAVE) by JetBlue Airways (JBLU) on antitrust grounds. This decision resulted in a significant 47% decline in Spirit Airlines’ stock.
  3. IRBT: According to The Wall Street Journal, the European Union’s competition watchdog intends to block Amazon’s (AMZN) bid to purchase iRobot (IRBT).
  4. SAVE: JetBlue and Spirit announced that they have jointly filed a notice of appeal “consistent with requirements of the merger requirements”.


  1. CATC: On January 16, 2024, Cambridge Bancorp (CATC) announced that the completion of its merger with Eastern Bankshares (EBCis subject to regulatory approvals from the Federal Reserve Board, the Federal Deposit Insurance Corporation (FDIC), the Massachusetts Commissioner of Banks, the Massachusetts Board of Bank Incorporation, and the New Hampshire Banking Department.
  2. GRCL: Gracell Biotechnologies Inc. (GRCL) and AstraZeneca (AZN) made the filings required under the HSR Act on January 10, 2024.
  3. SAVE: Spirit Airlines provided a preliminary fourth quarter update indicating that revenue was at the high end of its initial estimate and that operating expenses were lower than expected. The company also addressed liquidity concerns and the steps it took to shore up liquidity.

Shareholders Meeting Schedule:

  1. CATC: Cambridge Bancorp (CATC) announced that the special meeting of stockholders will be on February 28, 2024.
  2. SQNS: Sequans Communications S.A. (SQNS) announced that the special meeting of stockholders will be on February 12, 2024.
  3. EAR: Eargo, Inc. (EAR) announced that the special meeting of shareholders will be held on February 13, 2024.
  4. GTH: Genetron Holdings (GTH) announced the extraordinary general meeting of shareholders to consider and vote on a proposal to adopt the Agreement and Plan of Merger with New Genetron and Genetron New Co. will be held on February 21, 2024.
  5. TGH: Textainer Group Holdings Limited (TGH) announced that the special meeting of shareholders will be held on February 22, 2024.

Closed Deals:

  1. BVH: Bluegreen Vacations Holding (BVH) announced the completion of the previously announced acquisition of Bluegreen Vacations by Hilton Grand Vacations (HGV). It took 72 days for this deal to complete.

Terminated Deals:

  1. PGTI: On January 17, 2024, PGT Innovations announced that it terminated its merger agreement with Masonite International (DOOR) dated December 17, 2023.

Weekly Spread Changes:

The table below shows weekly spread changes between January 12, 2024, and January 19, 2024.

Company Quote
Last Week
Spread Change
SAVE6.68JetBlue Airways Corporation (JBLU)4.98364.07%107.08%256.99%All Cash
IRBT17.26Amazon (AMZN)155.33199.83%72.67%127.16%All Cash
ACI22The Kroger Co. (KR)45.9423.86%19.99%3.87%Special Conditions
FGH1.37FG Financial Group, Inc. (FGF)1.4254.01%1.44%2.57%All Stock
CCLP1.745Kodiak Gas Services (KGS)21.686.85%4.42%2.43%All Stock
GTH3.76New Genetron Holding Limited and Genetron New Co Limited (N/A)7.18%8.77%-1.59%All Cash
HA13.92Alaska Air Group, Inc. (ALK)34.8429.31%31.00%-1.69%All Cash
FFNW20.92Global Federal Credit Union (N/A)10.80%12.52%-1.72%Special Conditions
EAR2.64Patient Square Capital (N/A)-3.41%-1.16%-2.25%All Cash
MIXT9.1PowerFleet, Inc. (PWFL)3.3660.98%63.37%-2.39%All Stock

Top 10 Merger Arbitrage Deals With The Largest Spreads:

Please do your own due diligence on deals with large spreads. Some of these large spreads might be related to regulatory issues or because of the way the deal is structured. We classify some of these deals as “special situation” deals in our merger arbitrage tool and provide additional details to help with the analysis. There may be unique situations related to special dividends, spinoffs, proration, etc. that need to be accounted for when looking at these spreads.

SAVE07/28/2022JetBlue Airways Corporation (JBLU)$31.00$6.6806/30/2024364.07%825.38%
IRBT08/05/2022Amazon (AMZN)$51.75$17.2608/05/2024199.83%370.24%
MIXT10/10/2023PowerFleet, Inc. (PWFL)$14.65$9.103/31/202460.98%317.99%
HA12/03/2023Alaska Air Group, Inc. (ALK)$18.00$13.9206/30/202529.31%20.34%
GAN11/07/2023Sega Sammy Creation Inc. (N/A)$1.97$1.5312/31/202428.76%30.43%
ACI10/14/2022The Kroger Co. (KR)$27.25$2203/31/202423.86%124.43%
X12/18/2023Nippon Steel (NISTF)$55.00$47.8309/30/202414.99%21.63%
CPRI08/10/2023Tapestry, Inc. (TPR)$57.00$50.2206/30/202413.50%30.61%
ANSS01/16/2024Synopsys (SNPS)$375.44$336.6206/30/202511.53%8.00%
FFNW01/11/2024Global Federal Credit Union (N/A)$23.18$20.9212/31/202410.80%11.43%

Deals In The Works


  1. LL: LL Flooring (LL) founder Tom Sullivan withdraws his $3 per share takeover offer.
  2. EDR: According to Bloomberg, Silver Lake will reportedly submit a bid for Endeavor Group (EDR) in the coming weeks. Silver Lake, which has a 71% voting stake in Endeavor, plans to sell parts of the company after it takes it private.
  3. MMacy’s (M) said on Sunday it had rejected Arkhouse Management and partner Brigade Capital Management’s $5.8 billion proposal to take the department store operator private, citing concerns over deal financing and valuation.

SPAC Arbitrage

Potential SPAC IPO

  1. On January 17, 2024, Love & Health Ltd (LLLL) filed for a $50 million IPO.
  2. On January 18, 2024, Helix Acquisition Corp. II (HLXB) filed for a $100 million IPO.


  1. On January 19, 2024, JVSPAC Acquisition Corp. (JVSAU) announced the pricing of its $50 million IPO.

Business Combination

  1. On January 16, 2024, Vision Sensing Acquisition Corp. (VSAC) and Mediforum Co., Ltd entered into a business combination.
  2. On January 17, 2024, Quadro Acquisition One Corp. (QDROentered into a business combination with a group of seven companies in the sports collectibles, software, cloud-based IT, and healthcare services segments. These companies are affiliated with Global Growth, a private equity firm founded by Greg Lindberg.
  3. On January 18, 2024, Direct Selling Acquisition Corp. (DSAQentered into a business combination with FlyBlade (India) Private Limited.
  4. On January 18, 2024, Bowen Acquisition Corp (BOWN) and Shenzhen Qianzhi BioTechnology Co., Ltd entered into a business combination.

List of all pending Merger Arbitrage deals:

Target VolumeEstimated
Closing Date
+SAVE7/28/22JetBlue Airways Corporation (JBLU)All Cash$7.6 B$31.00$6.6899,641,9066/30/24364.07%830.54%
+IRBT8/05/22Amazon (AMZN)All Cash$1.7 B$51.75$17.2625,643,3308/05/24199.83%372.13%
+MIXT10/10/23PowerFleet, Inc. (PWFL)All Stock$140 M$14.65$9.1235,7073/31/2460.98%322.60%
+HA12/03/23Alaska Air Group, Inc. (ALK)All Cash$1.19 B$18.00$13.922,099,9916/30/2529.31%20.38%
+GAN11/07/23Sega Sammy Creation Inc. (N/A)All Cash$85.73 M$1.97$1.53271,15312/31/2428.76%30.51%
+ACI10/14/22The Kroger Co. (KR)Special Conditions$24.6 B$27.25$224,617,1073/31/2423.86%126.24%
+X12/18/23Nippon Steel (NISTF)All Cash$14.9 B$55.00$47.833,278,0119/30/2414.99%21.71%
+CPRI8/10/23Tapestry, Inc. (TPR)All Cash$8.5 B$57.00$50.22884,2456/30/2413.50%30.80%
+ANSS1/16/24Synopsys (SNPS)Cash Plus Stock$35 B$375.44$336.62889,6926/30/2511.53%8.02%
+FFNW1/11/24Global Federal Credit Union (N/A)Special Conditions$231.2 M$23.18$20.9244,14012/31/2410.80%11.46%
+GTH10/11/23New Genetron Holding Limited and Genetron New Co Limited (N/A)All Cash$126.44 M$4.03$3.7625,0333/31/247.18%37.99%
+JNPR1/09/24Hewlett Packard Enterprise (HPE)All Cash$14.31 B$40.00$37.414,754,9523/31/256.92%5.82%
+CCLP12/19/23Kodiak Gas Services (KGS)All Stock$854 M$1.86$1.74534,3636/30/246.85%15.62%
+ICLK11/24/23TSH Investment Holding Limited (N/A)All Cash-$12.92 M$4.08$3.824,5243/31/246.81%36.00%
+AMED6/26/23UnitedHealth Group Incorporated (UNH)All Cash$3.8 B$101.00$94.75222,4373/31/246.60%34.89%
+CERE12/06/23AbbVie Inc. (ABBV)All Cash$8.7 B$45.00$42.251,215,8666/30/246.51%14.85%
+HES10/23/23Chevron Corporation (CVX)All Stock$60 B$145.80$137.322,621,1416/30/246.17%14.08%
+SQNS8/07/23Renesas Electronics Corporation (N/A)All Cash$249 M$3.03$2.86188,2903/31/245.94%31.44%
+IMGN11/30/23AbbVie Inc. (ABBV)All Cash$7.29 B$31.26$29.5153,434,2846/30/245.91%13.49%
+TGAN1/11/24Renesas Electronics Corporation (N/A)All Cash$311.67 M$5.10$4.825566,89312/31/245.70%6.05%
+CNSL10/16/23Searchlight Capital Partners and British Columbia Investment Management Corporation (N/A)All Cash$3.1 B$4.70$4.4651,242,7991/15/255.26%5.35%
+NGMS5/14/23Aristocrat Leisure Limited (ALL.AX)All Cash$1.2 B$29.50$28.055,5445/14/245.17%16.70%
+SP10/05/23Metropolis Technologies, Inc. (N/A)All Cash$1.9 B$54.00$51.3889,95912/31/245.10%5.41%
+KRTX12/22/23Bristol-Myers Squibb (BMY)All Cash$12.7 B$330.00$315.54774,9546/30/244.58%10.45%
+AEL7/05/23Brookfield Reinsurance (BNRE) (BAM)Cash Plus Stock$4.3 B$58.26$55.71348,9546/30/244.57%10.42%
+AXNX1/08/24Boston Scientific Corporation (BSX)All Cash$3.17 B$71.00$67.992,178,0776/30/244.43%10.10%
+CSTR10/26/23Old National Bancorp (ONB)All Stock$344.4 M$19.22$18.4484,6016/30/244.26%9.71%
+SOVO8/07/23Campbell Soup Company (CPB)All Cash$2.7 B$23.00$22.1051,061,8036/30/244.05%9.24%
+FGH1/03/24FG Financial Group, Inc. (FGF)All Stock$38.87 M$1.43$1.373,4483/31/244.01%21.24%
+OLK10/17/23Thermo Fisher Scientific Inc. (TMO)All Cash$3.1 B$26.00$25.025245,7506/30/243.90%8.89%
+PXD10/11/23Exxon Mobil Corporation (XOM)All Stock$64.5 B$225.25$216.833,347,9006/30/243.88%8.86%
+LBC11/13/22Washington Federal, Inc. (WAFD)All Stock$654 M$9.95$9.5935,4722/29/243.77%36.23%
+VIA1/02/24Retailco, LLC (N/A)All Cash$190 M$11.00$10.6138,1966/30/243.68%8.39%
+NWLI10/09/23Prosperity Life Group (N/A)All Cash$1.9 B$500.00$483.5256,0006/30/243.41%7.77%
+WRK9/12/23Smurfit Kappa (SMFTF)Cash Plus Stock$23.24 B$41.33$39.991,983,3506/30/243.35%7.64%
+HOLI12/11/23Ascendent Capital Partners (N/A)All Cash$1.66 B$26.50$25.6751,533,8686/30/243.21%7.33%
+SWN1/11/24Chesapeake Energy Corporation (CHK)All Stock$7.4 B$6.58$6.4116,115,2516/30/242.71%6.19%
+SPLK9/21/23Cisco (CSCO)All Cash$28.45 B$157.00$153.241,926,9039/30/242.45%3.55%
+DSKE12/22/23TFI International Inc. (TFII)All Cash$1.12 B$8.30$8.115555,4436/30/242.28%5.20%
+PGTI1/17/24MITER Brands (N/A)All Cash$3.1 B$42.00$41.081,973,4936/30/242.24%5.11%
+LBAI9/27/22Provident Financial Services, Inc. (PFS)All Stock$1.3 B$14.16$13.85162,9403/31/242.23%11.80%
+HARP1/08/24Merck & Co., Inc. (MRK)All Cash$371.40 M$23.00$22.5274,0346/30/242.22%5.07%
+SMMF8/25/23Burke & Herbert Financial Services Corp. (BHRB)All Stock$371.5 M$29.09$28.4812,1693/31/242.13%11.29%
+KAMN1/19/24Arcline Investment Management (N/A)All Cash$1.8 B$46.00$45.052,569,5966/30/242.11%4.81%
+HMST1/16/24Firstsun Capital Bancorp. (FSUN)All Stock$277.15 M$15.32$15.01351,6026/30/242.04%4.65%
+DOC10/30/23Healthpeak Properties, Inc. (PEAK)All Stock$4.63 B$13.31$13.061,895,0756/30/241.93%4.39%
+CPE1/04/24APA Corporation (APA)All Stock$4.5 B$31.64$31.074,104,1886/30/241.83%4.18%
+CATC9/19/23Eastern Bankshares, Inc. (EBC)All Stock$528 M$68.22$67.0813,7203/31/241.70%8.98%
+TAST1/16/24Restaurant Brands International (QSR)All Cash$1 B$9.55$9.3953,062,3956/30/241.65%3.76%
+VERY10/03/23iA American Holdings, Inc. (N/A)All Cash$170 M$11.43$11.2459556/30/241.65%3.75%
+TCN1/19/24Blackstone (BX)All Cash$3.5 B$11.25$11.0795,519,2636/30/241.63%3.71%
+FRLN11/22/23Syncona Ltd (N/A)All Cash-$9.91 M$6.50$6.410,2473/31/241.56%8.27%
+TARO1/17/24Sun Pharmaceutical Industries (N/A)All Cash$257.34 M$43.00$42.3489,1296/30/241.56%3.56%
+AYX12/18/23Clearlake Capital and Insight Partners (N/A)All Cash$4.4 B$48.25$47.51718,7096/30/241.56%3.55%
+AMAM1/08/24Johnson & Johnson (JNJ)All Cash$1.33 B$28.00$27.65748,1436/30/241.27%2.89%
+THRX12/22/23Concentra Biosciences (N/A)Special Conditions-$27.71 M$4.05$4512,4892/29/241.25%12.01%
+CVLY12/12/23Orrstown Financial Services, Inc. (ORRF)All Stock$207 M$24.42$24.1433,1979/30/241.15%1.66%
+EGLE12/11/23Star Bulk Carriers Corp. (SBLK)All Stock$947.77 M$55.67$55.0667,6606/30/241.11%2.54%
+RYZB12/26/23Bristol Myers Squibb (BMY)All Cash$3.6 B$62.50$61.9579,1536/30/240.97%2.21%
+FNCB9/27/23Peoples Financial Services Corp. (PFIS)All Stock$129 M$6.84$6.7921,8466/30/240.71%1.61%
+TGH10/22/23Stonepeak (N/A)All Cash$7.4 B$50.00$49.65222,2343/31/240.70%3.73%
+ROVR11/29/23Blackstone (N/A)All Cash$2.3 B$11.00$10.931,463,2343/31/240.64%3.39%
+MDC1/18/24Sekisui House, Ltd. (SKHSY)All Cash$4.83 B$63.00$62.644,028,5846/01/240.57%1.60%
+AMNB7/25/23Atlantic Union Bankshares Corporation (AUB)All Stock$416.8 M$47.28$47.0215,6713/31/240.55%2.89%
+SRC10/30/23Realty Income Corporation (O)All Stock$9.3 B$43.07$42.982,237,5273/31/240.21%1.09%
+GRCL12/26/23AstraZeneca (AZN)Special Conditions$1 B$10.00$9.995865,2013/31/240.05%0.26%
+ESMT10/23/23Vista Equity Partners (N/A)All Cash$4 B$23.00$23.031,855,1663/31/24-0.13%-0.69%
+MRTX10/08/23Bristol-Myers Squibb Company (BMY)Special Conditions$3.7 B$58.00$58.8152,065,1813/31/24-1.39%-7.33%
+CWBC10/11/23Central Valley Community Bancorp (CVCY)All Stock$99.4 M$15.64$15.955,1976/30/24-1.62%-3.70%
+ICVX12/12/23AstraZeneca PLC (AZN)Special Conditions$435.14 M$15.00$15.411,429,8443/31/24-2.66%-14.07%
+EAR10/30/23Patient Square Capital (N/A)All Cash-$27.49 M$2.55$2.6430,9583/31/24-3.41%-18.03%
+ORTX10/05/23Kyowa Kirin Co., Ltd. (N/A)Special Conditions$387.4 M$16.00$16.6289,4333/31/24-3.73%-19.73%
+RAIN12/13/23Pathos AI, Inc. (N/A)Special Conditions-$35.53 M$1.16$1.22285,2491/31/24-4.92%-199.45%
+SIX11/02/23Cedar Fair, L.P. (FUN)All Stock$4.86 B$22.91$24.53730,4476/30/24-6.60%-15.07%

Disclaimer: I hold long positions in Cerevel Therapeutics (CERE), Capri (CPRI) and Genetron Holdings (GTH). Please do your own due diligence before buying or selling any securities mentioned in this article. We do not warrant the completeness or accuracy of the content or data provided in this article.