AirTran Holdings extends tender offer for Midwest Air to June 8, Midwest shareholders to vote June 14

By Lisa Kerner

Charlotte, N.C., May 17 - AirTran Holdings, Inc. said it extended its tender offer for Midwest Air Group until June 8, from May 16, because Midwest management will not take necessary steps to combine the companies.

As of the close of business on May 16, shareholders had agreed to tender about 13.9 million, or more than 56.6% of all outstanding share of Midwest Air, to AirTran subsidiary Galena Acquisition Corp.

Midwest's board has declined to take action to satisfy certain conditions, including waiving the provisions of Wisconsin law that protect Wisconsin corporations from hostile takeovers. In addition, the board recommended that its shareholders reject AirTran's offer, claiming it is inadequate and that it does not take into account the long-term value of Midwest's strategic plan.

Midwest shareholders are scheduled to vote on the AirTran deal at the annual meeting on June 14.

"We are extremely pleased with the response we are seeing from Midwest's shareholders, including the largest institutional investors," AirTran chairman and chief executive officer Joe Leonard said in a company news release.

"Currently valued, based on recent market prices, at nearly $16 per share, our tender offer has been gaining momentum over the last 30 days, even without the mailing of our proxy materials, which will include the latest version of our offer to exchange as filed with the Securities and Exchange Commission."

According to the SEC filing, the tender offer price was $15.85 per share as of May 8, which includes $9.00 in cash and 0.5842 of a share of AirTran stock.

Leonard said that AirTran would expect Midwest's management to take the significant level of tenders as a "serious vote of no-confidence in Midwest's risky go-it-alone plan and a clear message from Midwest's shareholders to meet formally with AirTran to discuss the terms of a merger agreement with the goal of combining the two airlines without waiting for the results of our proxy contest."

In response, Midwest senior vice president and general counsel Carol N. Skornicka said in a Midwest news release that "nothing has changed as far as control of Midwest Air Group is concerned; no shares have been purchased by AirTran.

"The exchange offer is subject to numerous conditions. Regardless of the number of shares tendered, AirTran would not purchase shares unless those conditions are waived or are satisfied."

On April 2, AirTran increased its buyout offer for Midwest Air Group to $9.00 in cash and 0.5842 of a share of AirTran stock - then worth $15.00 per share - from its original October 2006 offer of $11.25 per share.

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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