Frontier Airlines buying Spirit in $3B budget carrier deal

The parent company of the budget airline Frontier is buying Spirit Airlines in a $2.9 billion cash-and-stock deal that will give the combined company enough heft to better compete against the largest U.S. airlines.

The deal is valued at $6.6 billion when accounting for the assumption of debt and operating lease liabilities.

Spirit shareholders will receive 1.9126 shares of Frontier plus $2.13 in cash for each existing Spirit share they own. This implies a value of $25.83 per Spirit share at Frontier’s closing stock price of $12.39 on Friday.

Existing Frontier shareholders will own approximately 51.5% and existing Spirit stockholders will own approximately 48.5% of the combined airline. The transaction is expected to close in the second half of the year.

Shares of Frontier Group Holdings Inc., based in Denver, slipped almost 3% before the opening bell Monday. Shares of Spirit Airlines Inc., based in Miami, jumped about 12%.