By Lisa Kerner
Charlotte, N.C., Aug. 17 - Midwest Air Group Inc. agreed to be acquired by an affiliate of TPG Capital, LP for some $450 million, the company announced on Friday. The company's board of directors has unanimously approved the deal, which gives Midwest shareholders $17.00 cash per share. Midwest has about 26.6 million shares outstanding.
Midwest made the decision to go with TPG after the buyout group and AirTran Holdings, Inc. submitted "best and final" offers on Aug. 16. AirTran's offer was $16.27 per share in cash and AirTran stock, versus TPG's all-cash offer.
The transaction is expected to close in the fourth quarter subject to shareholder approval. TPG said it will fund the buyout with committed equity and no debt financing is required. A termination fee of $13.541 million is included in the agreement.
"This is a significant milestone for Midwest," chairman and chief executive officer Timothy E. Hoeksema said in a company news release.
"The agreement preserves the airline's status as Milwaukee's hometown airline and the popular Midwest Airlines brand for Midwest's loyal customers and employees."
Eagan, Minn.-based airline Northwest Airlines Corp. will be a minority passive investor in Midwest Air Partners, LLC, the entity formed to acquire Midwest, the release stated.
At least one Midwest shareholder, Pequot Capital Management, Inc., expressed concerns over a buyout from a private equity group, citing a number of synergies available in a merger with AirTran. Joe Leonard, AirTran's chairman and CEO, said "Midwest's shareholders are concerned that the acquisition of Midwest by a private equity firm, along with Northwest Airlines, will block competition, raise fares, reduce employment levels and reduce service."
Goldman, Sachs & Co., Godfrey & Kahn, SC and Sidley Austin LLP are advising Midwest. TPG was advised by Citigroup Global Markets Inc. and Skadden, Arps, Slate, Meagher & Flom LLP.
Midwest is a Milwaukee-based provider of jet service to primarily business travelers.
TPG Capital is the buyout group of TPG, a private investment firm based in Forth Worth, Texas.
AirTran is the parent company of AirTran Airways, a low-fare airline based in Orlando, Fla.
| Acquirer: | TPG Capital, LP
|
| Target: | Midwest Air Group Inc.
|
| Transaction total: | $450 million
|
| Price per share: | $17.00
|
| Termination fee: | $13.541 million
|
| Announcement date: | Aug. 17
|
| Expected closing: | Fourth quarter
|
| Stock price for target: | AMEX: MEH: $14.70 on Aug. 16
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