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AirTran raises stakes in Midwest bid

MILWAUKEE -- AirTran Holdings, Inc. again raised its hostile bid on Monday for rival Midwest Air Group Inc., this time by almost 13 percent to $389 million in cash and stock.

MILWAUKEE -- AirTran Holdings, Inc. again raised its hostile bid on Monday for rival Midwest Air Group Inc., this time by almost 13 percent to $389 million in cash and stock.

The parent company of Midwest Airlines, a recently entry into the Duluth market, has rebuffed previous offers in AirTran's continued attempt to acquire the regional airline by saying that Midwest would be stronger remaining on its own.

The newest bid by AirTran includes purchasing all outstanding shares of Midwest at $15, based on the closing price of AirTran common stock on Friday. The offer consists of $9 in cash and 0.5842 shares of AirTran common stock for each Midwest share.

The offer, according to an announcement early Monday, represents a premium of 83 percent over the 30-day average closing price of Midwest common stock prior to when AirTran made its first proposal in October 2006, for $290 million in cash and stock. The offer -- and a previous one -- were first disclosed on Dec. 13.

AirTran raised its offer to $345 million in January.

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"We firmly believe in the underlying value and benefits of combining these companies, and we are committed to bringing together these two airlines to create a truly national airline well-positioned for success in an increasingly competitive environment," Joe Leonard, AirTran's chairman and chief executive officer, said in a statement.

Carol Skornicka, Midwest Airlines senior vice president for corporate affairs, said the latest offer will be considered by Midwest's nine-member board of directors.

"The board will, consistent with its fiduciary obligations, evaluate the proposal thoroughly and make a recommendation to shareholders," Skornicka said. There is no timetable for that evaluation, she said.

Under state law, the board can consider more than the impact on shareholders, according to Skornicka. It can also consider the impact on all stakeholders, including employees, customers and the community it serves.

Some Midwest passengers, shareholders, and even Midwest Air Group CEO Tim Hoeksema have wondered whether such a merger would end Midwest's traditions of wide leather seats and fresh-baked cookies. But Leonard has said the merger would combine the best of both airlines, including the traditional Midwest perks.

AirTran, which owns the discount carrier AirTran Airways, made its offer through subsidiary Galena Acquisition Corp.

The expiration date of the latest offer is May 16 and could set up a showdown the following week when Midwest holds its annual shareholders meeting on May 23 if the board rebuffs the latest overture. AirTran's shareholders meeting is slated for the same day.

"Midwest shareholders will have the opportunity, at that time, to control their own destiny by determining whether the existing board of directors is really serving the best interests of shareholders," Leonard said.

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Leonard has said a combined company would reach $3.5 billion in revenues and have some 15,000 employees by the end of this year.

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On the Net:

Midwest: http://www.midwestairlines.com

AirTran: http://www.airtran.com

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