AirTran ends quest for Midwestern

AirTran ends quest for Midwestern AirTran Holdings Inc., the parent of Orlando-based AirTran Airways, said Sunday an AirTran bid to purchase Milwaukee-based Midwest Air Group has ended with Midwest's rejection of an enhanced tender offer from AirTran.
   'We are disappointed that the Midwest board has rejected our enhanced offer. We believe that a merger of AirTran and Midwest was a compelling strategic combination with similar fleets, complementary route networks, growth and advancement opportunities for employees and economic benefits to the communities we serve,” said Joe Leonard, chairman and chief executive officer of AirTran Airways. “For the good of our shareholders and crewmembers, we have terminated negotiations and allowed our tender offer to expire.'
   Expanding on the failed deal, he added: 'The Midwest board has chosen to ignore the overwhelming majority of shareholders’ wishes to merge with AirTran, a partner with whom Midwest could have grown and become a national carrier, including our commitment to provide employment protection and more jobs for its employees and more choices for its customers. Instead, the Midwest board has chosen a path that will benefit current senior management by selling out to a private equity firm and a so-called ‘passive’ investor whose involvement will surely raise antitrust concerns, casting doubt for shareholders on whether a transaction can, in fact, close. Furthermore, private equity investors are laser focused on generating short-term returns and the only way to accomplish that goal is to slash costs by cutting back on service and eliminating jobs. If the Midwest board is successful in selling the company to a private equity investor, the Midwest employees should be concerned about their job security and Midwest’s customer service is sure to suffer.'
   Less than one hour after rejecting the AirTran bid, Midwest issued a statement saying it would pursue an all-cash offer from TPG Capital L.P. to acquire all the outstanding shares of Midwest Air Group for $16 a share.
   AirTran made an enhanced proposal from its original offer, proposing to acquire all Midwest common stock for $15.75 a share, based on the closing price of AirTran common stock on Aug. 10. The offer comprised $9.50 in cash and 0.58 shares of AirTran common stock for each Midwest share. Total equity value of the transaction would have been more than $431 million, AirTran said.