Midwest Will 'Carefully Consider' Offer
Despite continued reluctance on the part of Midwest Airlines to
consider a hostile takeover bid by AirTran Holdings, Inc, parent
company of AirTran Airways, that doesn't mean AirTran has
given up on its merger offer. On Monday, the company issued
the following statement from Joe Leonard, AirTran's chairman and
chief executive officer:
"Midwest has said that its board will evaluate carefully
AirTran's increased offer which substantially enhanced the latest
tender offer of $15 per share for all of the Midwest shares and
make its recommendation to investors no later than April 13. We
believe that all stakeholders would benefit more from our proposal
than from any stand-alone plan that Midwest can support. It is time
for the Midwest board to demonstrate its commitment to shareholder
value, not to entrenchment, and enter into discussions to learn
more about our proposal. 'Just say no' is a slogan, not a way
around the board's fiduciary duty, particularly when its primary
advisor is being paid a premium to justify remaining
independent."
The updated offer was made through Galena Acquisition Corp.
which is a wholly owned subsidiary of AirTran and represents a
premium of 83 percent over the 30- day average closing price of
Midwest common stock prior to AirTran's initial proposal, according
to an Air Tran press release.
AirTran's first offer for all of
Midwest's common stock was made on October 20, 2006 for $11.25 per
share. The newest offer represents an approximately 65 percent
premium over the closing price of Midwest stock on December 12,
2006. The expiration date has been extended to May 16, 2007.
As ANN reported last month,
AirTran says a merger would create a new national low-cost carrier
-- and result in 1,100 new jobs in Wisconsin, home to Midwest's Oak
Creek headquarters. The Orlando, FL-based airline also says a
merger would add nearly $1 billion to the state economy, once the
airline expands available routes from Milwaukee's General Mitchell
International Airport.
The influx of new jobs would boost local payroll by some $30
million, AirTran notes.
Those who have been following the merger saga will remember
AirTran offered $290 million for Midwest Airlines in October --
right at the time US Airways Group was also making a hard run at
Delta Air Lines. Midwest executives swiftly rejected that bid... as
they did a second offer in January.
Just as USAG did with Delta, AirTran has now taken its case to
what it hopes will be a more receptive audience: Midwest
shareholders. So far, however, those investors appear to be heeding
Midwest's request to stick with the airline -- just as Delta's
creditors stuck with that carrier, which in the end doomed USAG's
bid.
Midwest Air Group CEO Tim Hoeksema told The Associated Press an
AirTran merger would strip Midwest of its character -- by cramming
more seats onto its planes, and taking away the carrier's trademark
chocolate-chip cookies.
"I think their vision, based on what you read, is to convert it
to a commodity carrier that does not have the focus on service that
we do and to make it into a high density, low-cost product,
eliminate some of the things that we offer ... and turn it into
AirTran," Hoeksema said.
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