Spreads - i.e. the difference between a share's price and the price offered by an acquirer - can sometimes make you salivate, but they are rarely too generous for no good reason.

The budding arbitrageurs who had done so well with Twitter and Activision - two complex and ever-changing situations - had perhaps tended to forget this when they rushed to acquire shares in US airline Spirit Airlines.

In mid-summer 2022, JetBlue offered to buy the low-cost carrier at a valuation of $33.50 per share. The market never bought it, and Spirit shares remained below the $20 mark for most of 2023. On the surface, the opportunity did not lack allure.

But only on the surface, as the American courts yesterday ruled against the takeover and merger of the two companies. The reason given was the need to protect consumers, especially those among the less fortunate, the very public targeted by Spirit. In the wake of the verdict, the share price fell by 47%.

Teasing spirits will point out that JetBlue will no doubt be able to buy back Spirit's assets once the latter has declared bankruptcy. After all, it's hard to see how the company can sustain its business model on its own.

Despite its very strong growth, the company's operations are loss-making, and its financial dynamics are characterized by a veritable hemorrhage of cash year after year. To finance itself, Spirit has pushed its debt levels to unsustainable levels; its current market capitalization represents only 13% of its enterprise value.

Only a takeover could save Spirit, in the hope that the synergies arising from its integration - always more obvious in theory than in practice - into a larger-scale player would make its operation viable. Unfortunately, this hope was dashed yesterday by the American courts.

We wonder about the regulator's attitude, since it's hard to see how forcing Spirit into bankruptcy will help the company's customers. For JetBlue, on the other hand, the news is not necessarily negative: with a bit of luck, the company will be able to buy Spirit's assets at a knock-down price should the latter find itself in bankruptcy proceedings.

The market - which was right on the money on this one - welcomed the news, and immediately boosted JetBlue's share price.