Originally Posted by Andy

The DOJ case is a very 'novel' (that's the word I've seen used in other writings) of section 7 of the Clayton Act:
[n]o corporation engaged in commerce shall acquire, directly or indirectly, the whole or any part of the stock or other share capital and no corporation subject to the jurisdiction of the Federal Trade Commission shall acquire the whole or any part of the assets of another corporation engaged also in commerce, where in any line of commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly.

The DOJ is interpreting this to mean that if any customer has to pay a higher ticket price as a result of the merger, then the above secion applies. The problem is the word 'substantially'. Given the Judge's penschant for exact definitions of words (as i cited in examples above), there is no way that he will find that the merger will substantially less competition.

From what I've read, the DOJ's on a mission to oppose all mergers, no matter how much sense they make. They have been more active than ever. In fact, the DOJ didn't win any points with the Judge by refusing to discuss any remedies with B6 (ie divestitures).
The DOJ can make any statement they want after they lose this, but I don't think even the most lefty of Judges would rule in favor of the DOJ since it's so over the top.

Originally Posted by Flyby1206

Thanks for this, yeah after listening to that Cohen interview it seemed like the DOJ case was extremely weak. And this is their portion of the trial to present their best case... 😬 Hopefully JB nails their arguments and the expert witnesses work to our benefit.

Originally Posted by Andy

I'll be there the week after Thanksgiving in person ... assuming DOJ doesn't settle in the meantime.
The DOJ does have an 'out' on this; they can claim they got the necessary divestitures to allow the merger to proceed. IF that happens, expect the stock to rip higher due to short covering. Same when the Judge issues his ruling.

Originally Posted by Aquaticus

The materially adverse clause will force JetBlue and Spirit to renegotiate a purchase price low 20’s. With most of these airlines down 65-75% from when the original merger was agreed to the JetBlue board would be insane to not try to negotiate further. Spirit isn’t worth 3.5b. I think you will see a cash and stock offer equivalent to frontiers old offer. If JetBlue wins or settles I am taking my ball and going home as soon as the stock jumps.

Originally Posted by Aquaticus

The materially adverse clause will force JetBlue and Spirit to renegotiate a purchase price low 20’s. With most of these airlines down 65-75% from when the original merger was agreed to the JetBlue board would be insane to not try to negotiate further. Spirit isn’t worth 3.5b. I think you will see a cash and stock offer equivalent to frontiers old offer. If JetBlue wins or settles I am taking my ball and going home as soon as the stock jumps.

Originally Posted by Flyby1206

Apparently it is very difficult to trigger that MAE clause since it cant include something broad affecting the industry/stock market in general. ULCC business model, GTF engine issues, decrease demand, are all broad systemic issues not specific to NK, although you could say they face them worse than some other carriers 🤷‍♂️

Originally Posted by Andy

The DOJ case is a very 'novel' (that's the word I've seen used in other writings) of section 7 of the Clayton Act:
[n]o corporation engaged in commerce shall acquire, directly or indirectly, the whole or any part of the stock or other share capital and no corporation subject to the jurisdiction of the Federal Trade Commission shall acquire the whole or any part of the assets of another corporation engaged also in commerce, where in any line of commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly.

The DOJ is interpreting this to mean that if any customer has to pay a higher ticket price as a result of the merger, then the above secion applies. The problem is the word 'substantially'. Given the Judge's penschant for exact definitions of words (as i cited in examples above), there is no way that he will find that the merger will substantially less competition.

From what I've read, the DOJ's on a mission to oppose all mergers, no matter how much sense they make. They have been more active than ever. In fact, the DOJ didn't win any points with the Judge by refusing to discuss any remedies with B6 (ie divestitures).
The DOJ can make any statement they want after they lose this, but I don't think even the most lefty of Judges would rule in favor of the DOJ since it's so over the top.

Originally Posted by Excargodog

You would think DOJ would have gone after Big Pharma who for decades have now been buying up direct competitors and then jacking up prices on their common products. Going after two companies with ~10% route overlap when neither are currently in the top five in terms of passenger miles (far less in terms of revenues) while ignoring arguably more monopolistic deals just makes DOJ look cowardly.

Originally Posted by Aquaticus

The materially adverse clause will force JetBlue and Spirit to renegotiate a purchase price low 20’s. With most of these airlines down 65-75% from when the original merger was agreed to the JetBlue board would be insane to not try to negotiate further. Spirit isn’t worth 3.5b. I think you will see a cash and stock offer equivalent to frontiers old offer. If JetBlue wins or settles I am taking my ball and going home as soon as the stock jumps.

Originally Posted by Andy

Yes, not only too high a bar on the MAE clause, but also Robin really, really wants this to happen. Going back to NK shareholders with a lower offer puts the deal in jeopardy. B6 has the funding in place; I don't see any reason why Robin would take the chance on blowing the deal, especially since it's going to cost $400M anyway if they screw it up.