⌐ AV8OR WANNABE

Sorry if this has been posted before...

Midwest Air agrees to talk with AirTran
By Emily Fredrix, Associated Press
Last update: July 31, 2007 – 9:04 PM

MILWAUKEE - Midwest Air Group Inc. finally says it may be ripe for selling.
The regional airline that for months has fought a hostile buyout by AirTran Holdings Inc. signaled Tuesday that it will consider the $389 million offer.
Midwest, operator of Midwest Airlines, announced that a committee of its board of directors will start discussions with AirTran. The operator of low-cost AirTran Airways has long argued a combination of the two would create a strong, national carrier.
Midwest said its committee also will meet with other companies that have recently expressed interest in the airline. It did not name those companies Tuesday and was quick to caution that the discussions do not mean a buyout is imminent.
"There is no assurance that this process will result in a transaction with AirTran or any other party," Midwest said.
But analysts, stockholders and Wall Street think otherwise. Midwest shares soared on the news, rising $1.33, or 11 percent, to $13.94 Tuesday.
Midwest's largest shareholder, Octavian Advisors, was heartened by the news and wants the two sides to move as quickly as possible.
"We think this is a big step forward," said Richard Hurowitz, CEO of the hedge fund, which owns more than 6 percent of Midwest's stock.
AirTran said in a statement the company is likewise pleased.
"We look forward to working with them," said Joe Leonard, AirTran's chairman and chief executive.

ryane946

It is going to happen. Airtran and Midwest will merge!

We have been talking about this for a while. Here is an old thread I dug up.
http://www.airlinepilotforums.com/sh...ad.php?t=11367

This merger really makes sense. Airtran is offering lots of money (even more than Midwest is worth). Airtran is doing good amongst the lcc's, and Midwest is starting to slide (2nd quarter profit down 50%).

It will happen. I am now 100% sure. It should be good for both companies. And then there will be less competition (good for all of us).

CarlSpackler

I don't know about 100%. There's still the possibility of NWA driving the price up to try and keep AirTran out of their backyard. We'll probably know more over the next month and by the Aug. 10 deadline. If this deal (likely) happens I truly believe it's just the tip of the iceberg for this company. Things are getting interesting to say the least.

deadstick35

PHILADELPHIA, Aug 12 (Reuters) - AirTran Holdings Inc. (AAI.N: Quote, Profile, Research) said on Sunday its $380 million hostile offer to acquire Midwest Air Group Inc. (MEH.A: Quote, Profile, Research) had expired, and the two airlines had ended discussions for a possible merger.

AirTran said Midwest's board chose to sell the airline to a private equity firm and a 'passive' investor. Additional details were not immediately available. Midwest could not be immediately reached for comment.

The Wall Street Journal reported on Friday that Northwest Airlines Corp. (NWA.N: Quote, Profile, Research) was considering partnering as a passive investor with one of the parties now weighing a bid for Midwest. (Reporting by Jessica Hall, editing by Valerie Lee)

TRS531

Midwest Air Group Board of Directors Unanimously Determines to Pursue $16 Per Share All-Cash Offer From TPG Capital
Sunday August 12, 112 pm ET
MILWAUKEE, Aug. 12 /PRNewswire-FirstCall/ -- The Board of Directors of Midwest Air Group (Amex: MEH - News), parent company of Midwest Airlines, today said that it has unanimously determined to pursue an all-cash offer from TPG Capital, L.P. on behalf of an affiliate of TPG and one or more partners to acquire all of the outstanding shares of Midwest for $16.00 per share.The board took its action after receiving a letter from AirTran Holdings, Inc. (NYSE: AAI - News) in which AirTran stated it was making its best and final offer to acquire all of the outstanding shares of Midwest pursuant to a one-step merger for consideration consisting of cash and stock at $15.75 per share, valued at Friday's closing price of AirTran's common stock. In reaching that determination, the board concluded that the TPG offer presented greater value and certainty for Midwest shareholders than the AirTran offer.
Under the terms of the offer from TPG, the private equity investor indicated that its acquisition "would permit the Company to continue its rich legacy as a leading provider of customer oriented quality air service."
Midwest and TPG expect to execute a definitive merger agreement no later than August 15, 2007.
The offer from TPG is set forth in the following letter that was received by the Midwest board on August 12:
Board of Directors
Midwest Air Group, Inc.
6744 South Howell Avenue
Oak Creek, Wisconsin 53154

Ladies and Gentlemen:

TPG Capital, L.P. ("TPG") is pleased to submit the following indication
of interest for an acquisition by TPG of Midwest Air Group, Inc., a
Wisconsin corporation (the "Company"), for $16.00 in cash for each share
of the Company's common stock.

We believe that our proposal offers a compelling opportunity for your
shareholders and is superior to the proposal that has been submitted by
AirTran Holdings, Inc. ("AirTran"). The proposed purchase price is an all
cash offer, which, in light of the recent volatility in the United States
equity markets, represents a more certain value for your shareholders
than the large stock component of AirTran's proposal. In addition to
providing more certain value, an acquisition by TPG would permit the
Company to continue its rich legacy as a leading provider of customer
oriented quality air service. Our acquisition would provide for greater
stability and prospects for all of the Company's important constituencies
including customers, employees and the greater Milwaukee and Kansas City
metropolitan areas. We have been very impressed with your management team
and are confident in its ability to maintain the Company's reputation of
excellent service, while at the same time running a profitable airline.

We believe that our experience in this sector, together with our track
record for maintaining stable, long term investments, argue strongly in
favor of an acquisition by TPG. We are one of the largest private equity
investors in the world and the most experienced private equity investor
in the global airline sector. Investments carried out by us in and
related to the airline industry include, among others, Continental
Airlines, America West Airlines, Ryanair, Hotwire and Sabre. We are proud
of the record that we and the management teams have accomplished in
creating value in these companies.

Our transaction would be financed through contributions from TPG Partners
V, L.P., a fund we manage with $15.3 billion of committed equity capital,
and one or more partners, which contributions would be fully committed at
the time of signing. The consummation of the transaction would not be
subject to a financing condition, and we do not anticipate any issues in
obtaining antitrust clearance or any other regulatory approvals, so we
anticipate consummation would be subject only to customary conditions.

We are fully prepared to complete confirmatory legal and accounting due
diligence and the concurrent negotiation of definitive documents on an
expedited basis in order to execute a transaction by August 15, 2007.

This letter is an expression of interest only and any binding agreement
would arise only upon execution of definitive agreements.

We are very excited about the prospects for this transaction, and we look
forward to having the opportunity to work with you to finalize a
transaction that we believe will benefit your shareholders and other
constituencies. We are prepared to meet with you or your representatives
at any time to discuss all aspects of our proposal.

Very truly yours,

TPG Capital, L.P.
By:
Name: Richard P. Schifter
Title: Partner

SWAcapt

Oh really! Somebody forgot to tell TPG Partners. Too Funny.

Polarfr8dog

Damn -- you beat me to it. It's all over the Biz Journals from Milwaukee. Northwest doesn't have enough money to pay their pilots what they're worth but can make an investment company to keep AirTran out of their back yard. . . go figure.

smiley

I've heard from a couple people at AirTran that if the Midwest deal didn't go through, that there was a plan b, and probably a plan c as well. Any ideas out there on what plan b will be?

⌐ AV8OR WANNABE

Could also be plan S, as in a SWA takeover? Who knows? I mean SWA got too much cash on hand (making it a hostile takeover target) and AT needs more gates to keep expanding and ATL is pretty full. In a way it would make sense. As far as 1-fleet equipment argument - well, with Gary K all the best are off, he's much more aggressive than his predecessor so nothing should be counted out. Then again, they could just keep growing on their own. Either way, I think AT guys/gals will do just fine...

Here's a Forbes article:


Midwest Air Has A New Suitor
Joshua Lipton, 08.13.07, 5:20 PM ET




Related Stories
Midwest Air Takes Off With New Offer
AirTran Sets New Course
Strike Three For AirTran
Update -- Airline Stocks Rise On Merger Talks

It must be nice to be so sought-after.

AirTran Holdings finally abandoned its long pursuit of Midwest Air Group, after two years on their trail. But Midwest now can entertain new suitors, as it fields an offer from a group led by TPG Capital and Northwest Airlines.

The team led by Fort Worth, TX-based TPG has decided it wants to snatch up Midwest (amex: MEH - news - people ) for $400 million. The offer from TPG to acquire all outstanding shares at $16 a share beat the bid of $15.75 per share from AirTran (nyse: AAI - news - people ).

AirTran has long courted Midwest, upping its offer from an opening proposal of $78 million in June 2005. But the higher offer didn't dampen Midwest opposition.

In late February, Midwest chief executive Timothy E. Hoeksema sent shareholders a letter in which he argued that Airtran was losing business and offering an inferior product.

"AirTran's low-cost carrier business model is in trouble," wrote Hoeksema. "AirTran is desperate to buy Midwest to stave off further erosion of its business."

A successful deal would have helped AirTran spread its wings beyond its current regional presence. AirTran flies mostly to and from its Atlanta hub. Midwest flies from Milwaukee, Wis., and Kansas City, Mo. (See: " AirTran Still Pursuing Midwest.")

But the new offer from TPG looked more promising to the front office over at Midwest.

"The board concluded that the TPG offer presented greater value and certainty for Midwest shareholders than the AirTran offer," Midwest said.

In a client note, Jim Corridore, analyst at Standard & Poor's, reiterated a "Hold" opinion on shares of Midwest Air Group.

Corridore said that Midwest expects to execute a definitive merger agreement with the TPG Capital group by August 15th. He also thinks AirTran would have been a better fit for Midwest, since he believes AirTran had less overlap in its markets with Midwest than does Northwest Airlines (nyse: NWA - news - people ). Corridore raised his 12-month target price by $1 to $16, to reflect the offer price.

In afternoon trading Monday, shares of Midwest Air Group were down 1.4%, or 20 cents, to $14.03. Shares of AirTran decreased 1.7%, or 18 cents, to $10.52.

Why, though, would Northwest want a piece of Midwest?

Raymond Neidl, airline analyst at Calyon Securities, said it was a defensive play. "They keep a powerful AirTran out of their backyard, specifically the upper Midwest and Milwaukee, which they consider their territory," he said. "AirTran would be tougher competitor than Midwest is."

Neidl approved of the move, pointing out that Northwest, as part of the deal, is only making an equity investment, not taking part in the management of Midwest.

-- The Associated Press contributed to this article.

⌐ AV8OR WANNABE

Polarfr8dog - love your avatar - any chance you could share the pic via PM or email? It looks great this small I'd imagine it looks even better in larger format?