After months of back and forth, Spirit Airlines (NYSE: SAVE) finally agreed to merge with JetBlue (NASDAQ: JBLU) to create the fifth largest airline in the United States. However, the deal still needs to pass shareholder and regulatory hurdles. Notably, the agreement creates a merger arbitrage -- a short-term investing strategy of buying stocks of companies trading below their acquisition price.
Here's what you need to know about the acquisition and why Spirit Airlines stock is worth buying even after the merger announcement.
As part of the merger agreement, Jet Blue will acquire Spirit for $33.50, valuing Spirit at an enterprise value of $7.6 billion. Notably, Spirit shareholders will receive a prepayment of $2.50 per share in cash upon approval once they vote to approve the merger and whether or not regulators ultimately approve the deal.
For further details see:
Spirit Airlines Stock Is Still a No-Brainer Buy After JetBlue Merger Announcement -- Here's Why