Every company needs to decided if they want to get bigger or stay the same size and it is up to the owners to decide. If they decide to get bigger often times that means a merger or acquisition is part of the process, for internal growth will get the company so far, but a merger could leap frog the company to the new point. Once a merger is decided, it will take a process to decide which company and what price? ideally the merger is more friendly that a fight, and then companies have to decide who will manage the larger organization. There are multiple decisions to be made but the issue is mergers will take a significant time of the senior management. Once they begin to put the time in, it is very difficult to drop the merger because the other side knows your financials and you know their financials. However, in most industries there is a regulatory body and often they say yes, but sometimes they say no.

In an article by David Shepardson and Aatreyee Dasgupta of Reuters, JetBlue and Spirit Airlines called off their $3.8 billion merger because a US judge blocked the deal on anti-competition concerns. If the merger had be successful, it would have created the 5th largest airline.

US Attorney General Merrick Garland said it was another victory for the Justice’s Department work on behalf of American consumers. The Justice Department believed the merger would seen fares raised and fewer choices by consumers.

JetBlue’s chief executive officer Joanna Geraghty believed after the loss of the court case, the probability of receiving a green light to move forward with the merger is extremely low.

Spirit CEO Ted Christie agreed and did not see a possibility to regulatory approval by the required July 24 deadline.

JetBlue will pay Spirit $69 million for dropping the merger. JetBlue had paid out $425 million in total prepayments.

Spirit Airlines, the 7th largest airline is facing weak demand as it tries to regain profitability. Some analysts believe the company is headed towards a Chapter 11 bankruptcy.

JetBlue, the 6th largest, is in better financial shape and expects to boost revenues by $300 million and on track to deliver $175-200 million in cost savings from its structural cost program.

Linking to dividend paying stocks, these companies have the revenues to be able to do mergers and every company has an active strategic planning process. All the companies look to do it internally or jump start the process with a merger. All mergers tend to need some form of government approvals which is why they pay lobby firms to ensure the process at least from the government goes smoothly. The idea is to ensure the government is either on your side or not against the company when mergers are announced. It could easily be said the management did not do their jobs as well as they should have in the JetBlue – Spirit merger. Possibly if Spirit does file for Chapter 11 bankruptcy, JetBlue will know which are the best assets to buy at a discount.

There are more questions than answers, till the next time – to raising questions.