Kingfisher
2007-08-13 14:33:59 UTC
Midwest Air Group, which had been fending off hostile suitor AirTran, has
accepted a higher bid of more than USD$400 million from private equity firm
TPG Capital and Northwest Airlines.
TPG's USD$16-a-share offer includes a passive investment by Northwest, which
partners with regional carrier Midwest. AirTran, which had bid USD$15.75 per
share in cash and stock for Midwest, said it would not raise its offer.
"We have terminated negotiations and allowed our tender offer to expire,"
AirTran Chief Executive Joe Leonard said in a statement. "At this time, we
will focus our efforts on AirTran's strategic plan."
Midwest had steadfastly opposed AirTran's approach for months. The carrier's
resistance, however, weakened in June after shareholders elected three board
members nominated by AirTran.
Milwaukee, Wisconsin-based Midwest entered into talks with AirTran at the
end of July, but at the time said it would also speak to other potential
buyers that had stepped forward.
TPG's offer, which Midwest said was subject to a final value calculation but
would probably exceed USD$400 million, represents a 12.5 percent premium to
Midwest's closing share price of USD$14.23 on Friday.
The transaction is not subject to financing conditions, TPG said in its
offer letter to Midwest -- a key consideration given recent credit market
turmoil that has created bumpy conditions for other private equity deals.
Midwest said in a statement late on Sunday that it and TPG expected to sign
a definitive merger agreement by Wednesday.
TPG has a history of investing in airlines, including approaches earlier
this year in the European market.
Northwest said its investment, for an undisclosed amount, would facilitate
the transaction, but added that it had no plans to participate in the
management or control of Midwest if TPG succeeds in its takeover bid.
AirTran had hoped to combine Midwest's presence in the central United States
with its strength on the East Coast.
AirTran said that TPG's offer, given the passive investment from Northwest,
could raise antitrust concerns, which could make it more difficult for the
transaction to win regulatory approval.
TPG, in its letter to Midwest, said it did not anticipate any issues in
obtaining antitrust clearance or other regulatory approvals.
Analysts have long said the industry needed consolidation to reduce excess
capacity so airlines can raise fares and derive savings from combining their
operations.
But while TPG may be more aggressive in cutting Midwest's capacity, the deal
is not likely to make much impact on the industry in terms of reducing
supply or spurring deal-making, said JPMorgan analyst Jamie Baker.
"Northwest's passive stake in TPG Capital's offer for Midwest doesn't kick
start long-awaited consolidation, in our view, which frankly is too bad,"
Baker said in a note.
Northwest said a code-sharing agreement with Midwest will remain in place,
and post-merger the two airlines could explore cost reductions such as joint
fuel purchasing.
accepted a higher bid of more than USD$400 million from private equity firm
TPG Capital and Northwest Airlines.
TPG's USD$16-a-share offer includes a passive investment by Northwest, which
partners with regional carrier Midwest. AirTran, which had bid USD$15.75 per
share in cash and stock for Midwest, said it would not raise its offer.
"We have terminated negotiations and allowed our tender offer to expire,"
AirTran Chief Executive Joe Leonard said in a statement. "At this time, we
will focus our efforts on AirTran's strategic plan."
Midwest had steadfastly opposed AirTran's approach for months. The carrier's
resistance, however, weakened in June after shareholders elected three board
members nominated by AirTran.
Milwaukee, Wisconsin-based Midwest entered into talks with AirTran at the
end of July, but at the time said it would also speak to other potential
buyers that had stepped forward.
TPG's offer, which Midwest said was subject to a final value calculation but
would probably exceed USD$400 million, represents a 12.5 percent premium to
Midwest's closing share price of USD$14.23 on Friday.
The transaction is not subject to financing conditions, TPG said in its
offer letter to Midwest -- a key consideration given recent credit market
turmoil that has created bumpy conditions for other private equity deals.
Midwest said in a statement late on Sunday that it and TPG expected to sign
a definitive merger agreement by Wednesday.
TPG has a history of investing in airlines, including approaches earlier
this year in the European market.
Northwest said its investment, for an undisclosed amount, would facilitate
the transaction, but added that it had no plans to participate in the
management or control of Midwest if TPG succeeds in its takeover bid.
AirTran had hoped to combine Midwest's presence in the central United States
with its strength on the East Coast.
AirTran said that TPG's offer, given the passive investment from Northwest,
could raise antitrust concerns, which could make it more difficult for the
transaction to win regulatory approval.
TPG, in its letter to Midwest, said it did not anticipate any issues in
obtaining antitrust clearance or other regulatory approvals.
Analysts have long said the industry needed consolidation to reduce excess
capacity so airlines can raise fares and derive savings from combining their
operations.
But while TPG may be more aggressive in cutting Midwest's capacity, the deal
is not likely to make much impact on the industry in terms of reducing
supply or spurring deal-making, said JPMorgan analyst Jamie Baker.
"Northwest's passive stake in TPG Capital's offer for Midwest doesn't kick
start long-awaited consolidation, in our view, which frankly is too bad,"
Baker said in a note.
Northwest said a code-sharing agreement with Midwest will remain in place,
and post-merger the two airlines could explore cost reductions such as joint
fuel purchasing.
--
Our Homepage
http://mysite.verizon.net/resot1sy/fishersofflorida/
Please Give The Site Time to Load
Our Homepage
http://mysite.verizon.net/resot1sy/fishersofflorida/
Please Give The Site Time to Load