Midwest Air board OKs equity group offer with funding from Northwest Airlines; AirTran tender ends

By Lisa Kerner

Charlotte, N.C., Aug. 13 - Midwest Air Group will pursue 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 saying it presented "greater value and certainty for Midwest shareholders than the AirTran offer," according to a company news release.

A definitive merger agreement is expected by Aug. 15.

The move comes after Air Tran gave its final offer for Midwest of $9.50 in cash and 0.5842 shares of AirTran common stock or about $15.75 per share. Total value of the offer was more than $431 million.

AirTran's tender offer for Midwest ended Aug. 10 without an extension. As previously reported, AirTran extended its $15-per-share tender 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.

TGP will finance the 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. A previously announced codeshare agreement between Northwest and Midwest will remain in place and the two airlines said they plan to explore possible cost reductions such as joint fuel purchasing.

"The Midwest board has chosen to ignore the overwhelming majority of shareholders' wishes to merge with AirTran, a partner with whom Midwest could have grown and become a national carrier, including our commitment to provide employment protection and more jobs for its employees and more choices for its customers," AirTran chairman and chief executive officer Joe Leonard stated in a company news release.

Instead, Midwest sold out to a private equity firm in a move that will benefit current senior management, Leonard added.

"If the Midwest board is successful in selling the company to a private equity investor, the Midwest employees should be concerned about their job security and Midwest's customer service is sure to suffer," said Leonard.

Northwest is an Eagan, Minn.-based airline. 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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