AirTran back with new offer for Midwest

By Lisa Kerner

Charlotte, N.C., Aug. 15 - Under pressure from Midwest Air Group, Inc. shareholders, AirTran Holdings, Inc. came back to the table with a new offer for the company: a $16.25-per-share negotiated merger transaction.

AirTran's latest offer includes $10.00 per share in cash and 0.6056 of a share of AirTran common stock for a total value of some $445 million based on AirTran's closing stock price on Monday.

Midwest announced on Aug. 13 that it was pursuing an all-cash offer from TGP Capital, LP to acquire the company for $16.00 per share. The company's board unanimously approved the TGP offer and a definitive merger agreement was expected by Aug. 15.

At the time of the announcement, Air Tran's final offer for Midwest was $9.50 in cash and 0.5842 of an AirTran share, or about $15.75 per Midwest share. The total value of the offer was more than $431 million.

TGP planned to finance its offer through contributions from its managed fund TPG Partners V, LP and partners including Northwest Airlines. While it will provide financing for the transaction, Northwest said it will not participate in the management or control of Midwest.

"Owners of Midwest recognize the overwhelming benefits of forming a truly national, low-cost, efficient carrier that will add flights, increase jobs and lower fares," AirTran Airways chairman and chief executive officer Joe Leonard said in a company news release.

"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."

AirTran's tender offer for Midwest ended Aug. 10 without an extension. As previously reported, AirTran extended the offer to Aug. 10 from June 8. The offer was originally slated to close on May 16. As of June 8, shareholders agreed to tender more than 14.6 million shares, of 59.5%, of Midwest to Galena Acquisition Corp., AirTran's wholly owned subsidiary.

Midwest is a Milwaukee-based provider of jet service to primarily business travelers.

AirTran is the parent company of AirTran Airways, a low-fare airline based in Orlando, Fla.

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