Filed under: Deals, Industry, Competitive strategy, Private equity
AirTran Holdings (NYSE: AAI) made another bid for Midwest Air Group (NYSE: MEH) today, pushing to total up to $445 million. The new cash-and-stock offer of $16.25 bid surpasses the $16-a-share cash offer made TPG Capital and Northwest Airlines (NYSE: NWA) on Sunday and is 50 cents higher than their previous last-ditch effort on Sunday, hours before the Midwest Board said it would pursue a rival bid.
This is the fourth time AirTran has raised its bid for Midwest since December. Despite AirTran receiving support from nearly 63% of Midwest shareholders, management refused to relinquish control to the Orlando-based discount airline. Midwest’s Board said it would “take AirTran’s revised offer under consideration.”
While the Board deliberates, let’s take a look at exactly what would happen to Midwest if they were to be acquired by either AirTran or TPG/Northwest:
- AirTran wants to rebrand the airline under its own name and integrate Midwest’s operations into its broader network.
- Under the TPG offer, Midwest would maintain its brand name and its current management. Northwest, a company that has had nothing but problem after problem since it emerged from bankruptcy earlier this year, would not participate in the management or have any direct control over Midwest. Instead, Northwest hopes to explore cost reduction strategies like joint fuel purchasing.
AirTran President Bob Fornaro said the Midwest Board is required to not only consider the price of a takeover offer but also the effect on employees and the community, according to USA Today. But what about the shareholders? A total of 63% of Midwest shareholders were willing to side with AirTran after a $15.75 offer, and now the offer has been improved to $16.25. It seems pretty clear who the shareholders want to be with.
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