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Aug 15, 2007 5:58 pm US/Central
AirTran Makes News $445M Bid For Midwest Air
Milwaukee, Wis. (AP) ―
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TPG Capital's backer on the deal includes Northwest Airlines of Minneapolis. (File)
AP
Midwest Air Group Inc.'s board of directors will meet Thursday to consider options for a sale, including a sweetened offer by AirTran Holdings Inc., which revived its bid just as Midwest was about to finalize another deal.
Milwaukee-based Midwest had expected to make official its deal with private investment firm TPG Capital on Wednesday, but the board delayed action to consider AirTran's new offer.
There is no guarantee that Midwest's board will reach a final decision at Thursday's meeting or enter into a written agreement, the company said in a news release.
Orlando, Fla.-based AirTran announced after markets closed Tuesday that it was renewing its bid for the operator of regional Midwest Airlines with a cash and stock offer of $16.25 a share, or about $445 million. The AirTran Airways operator has been courting Midwest for two years and argues that a combination with them would create a low-cost, national carrier.
TPG Capital had offered $16 a share in cash, or more than $400 million. Northwest Airlines Corp. is a passive partner in the TPG deal and has said it would not participate in Midwest's management should the TPG deal go through. It was not clear whether any airline operations would be combined.
There were few comments from any of the players Wednesday.
Midwest spokeswoman Carol Skornicka said in an e-mail that the company would make no other comment until the board has made a decision.
AirTran is pleased Midwest's board is meeting to consider the new offer, said Tad Hutcheson, AirTran's vice president of marketing.
Representatives from TPG Capital and Eagan, Minn.-based Northwest declined to comment.
AirTran had temporarily abandoned its hostile takeover effort Sunday night after raising its offer to about $15.75 per share in cash and stock.
Hours later, Midwest's board voted to accept the deal with TPG Capital.
However, AirTran returned to the fray Tuesday, offering Midwest shareholders $10 in cash and 0.6056 of a share of AirTran stock for each Midwest share. AirTran shares fell 52 cents, or 5 percent, to $9.83 Wednesday, bringing the value of its bid down to $15.95 per share, or about $437 million.
Shares of Midwest soared on news of AirTran's new offer, rising 74 cents, or 5.3 percent, to $14.70 Wednesday. Northwest shares were down $2.19, or 12.8 percent, to $14.91.
Robert W. Baird analyst Craig Kennison said in a note to investors Wednesday that it was likely TPG would raise its offer.
Midwest has said selling to TPG would allow Midwest to keep its name and heritage, while AirTran plans to incorporate Midwest under its name.
Midwest had pledged to remain independent as AirTran pursued a very public hostile takeover. AirTran raised its offer several times from its initial bid of $78 million in June 2005 and was rejected each time. AirTran made the offers public in December.
However, under shareholder pressure, Midwest's board set up a committee last month to look into a sale. The company eventually announced it had four suitors, though the only one it acknowledged publicly was AirTran.
Midwest shareholders seem interested in an AirTran deal. More than half had agreed to tender their shares should a deal be approved.
(© 2007 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
