AirTran CEO Concedes Defeat, For Second Time This Week
This appears to be the end... finally... to AirTran's seemingly
neverending attempt to purchase rival Midwest Airlines. The board
at Midwest Air Group agreed late Thursday night to a buyout deal
from TPG Capital/Northwest Airlines Corp., which upped its offer to
$17 per share to fend off a last-ditch effort by AirTran.
Under terms of the deal, Midwest Airlines will keep its name,
identity, independent status... and, perhaps most important to
travelers, its trademark chocolate chip cookies... under the TPG
deal, reports the Milwaukee (WI) Journal Sentinel.
"The cookies stay," Midwest Chairman and CEO Timothy Hoeksema
said, in a quick press conference called at 2300 CDT Thursday. The
airline will also retain control over its Midwest Connect regional
subsidiary.
There is a slim chance AirTran could make yet another offer
ahead of the sale being finalized, and the approval of the TPG
buyout by shareholders and regulators... but Thursday night,
AirTran CEO Joe Leonard appeared to accept defeat.
"We accept the Midwest board's decision," Leonard said. "We
sought to acquire Midwest because we believe joining the two
airlines would have created a unique, efficient, truly national
low-cost carrier with tremendous benefits for shareholders,
communities and employees. We hoped the Midwest board would come to
share our vision and reach a consensual agreement -- just as a
majority of Midwest shareholders recognized the value in our
strategic plan."
Hoeksema said the deciding factors in his airline choosing TPG
included the right to maintain autonomy as a brand, and the fact
the TPG deal was an all-cash offer. The AirTran deal was in a mix
of cash and stock, and contained a financing contingency if it fell
short of raising all the needed funding.
As ANN reported, Midwest
accepted a $16 per-share buyout deal by TPG Sunday night... which
appeared to be the end of the matter. In a tersely-worded
statement, AirTran said that was the end of its merger attempt...
until 48-hours later, when it raised its buyout offer to $16.25,
citing shareholder concerns over the legality of any buyout deal
involving Northwest Airlines.
Northwest is a passive financial backer in the TPG deal, though
parties on both sides maintain Midwest and NWA will remain
competitors. Under terms of the buyout, Northwest will have no
control over Midwest Air management, according to the Journal
Sentinel.
AirTran launched its first buyout bid for
Midwest last December. With the sale agreement signed,
AirTran's persistent pursuit of Midwest -- whose management
constantly rejected all attempts, though some shareholders were
interested in learning more -- appears to finally be over.
Well, barring an attempt by AirTran to purchase TPG, that is...
and at this point, nothing the Atlanta-based low-cost carrier might
do would surprise us.
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