Midwest Airlines said it signed confidentiality agreements with four "interested parties," taking the next step in potentially merging with AirTran Airways or another acquirer.
A spokesman for AirTran confirmed Friday that it signed a confidentiality agreement with Midwest. That allows AirTran to examine Midwest's contracts and financial records as part of its "due diligence" toward reaching a merger deal.
The Orlando-based discount carrier has offered nearly $15 a share in a cash-and-stock buyout bid for Midwest, based in a Milwaukee suburb. AirTran's offer is set to expire Aug. 10, but the airline could extend the offer and raise its bid if it appears close to an agreement, say industry insiders.
Midwest's management has resisted AirTran's hostile offer, disclosed months ago, arguing that its prospects are better as an independent airline.
However, the carrier's board of directors this week said it formed a five-member committee to "explore strategic and financial alternatives," including a potential sale to AirTran.
The move followed the election in June of three directors to Midwest's board who had been nominated by AirTran, as well as a presentation by AirTran's executives to the new board last month.
Industry experts have said they aren't aware of any other companies or investors who are kicking Midwest's tires. Some suggested that interested buyers may include Northwest Airlines, the second-largest carrier at the Milwaukee airport, or a private equity buyer such as TPG. The firm, formerly known as Texas Pacific Group, has offered to buy Spain's largest airline, Iberia Lineas Aereas de Espana SA.
However, Calyon Securities analyst Ray Neidl said most rival bidders for Midwest will have a hard time topping AirTran's bid. He said few potential buyers can realize as many benefits from a Midwest merger as AirTran, which flies similar planes and has few overlapping routes.
"Fifteen dollars, that's a steep price if you don't have any synergies," he said.
