MILWAUKEE_AirTran Holdings Inc. raised its hostile bid Monday for rival Midwest Air Group Inc. by almost 13 percent to $389 million in cash and stock.
The parent company of Midwest Airlines has rebuffed previous offers in AirTran's attempt to acquire the regional airline by saying that Midwest would be stronger remaining on its own.
Orlando, Fla.-based AirTran owns the discount carrier AirTran Airways.
The newest bid by AirTran is valued at $15 per Midwest share, 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.
That would be an 11 percent premium over Midwest Air's closing price of $13.51 on Friday on the American Stock Exchange.
Shares of Midwest soared on the news, rose 92 cents, or 6.7 percent, to $14.43 on the American Stock Exchange after rising to a 52-week high of $14.75. Shares of AirTran slipped 5 cents to $10.22 on the New York Stock Exchange.
AirTran disclosed in mid-December that it had bid $11.25 per share on Oct. 20 for Midwest Air Group. Midwest turned down the $290 million offer on Dec. 6.
AirTran then upped the offer in January to $345 million, offering shareholders $13.25 a share in cash and stock.
"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.
Midwest is recommending shareholders take no action on the latest offer until the board of directors makes a recommendation, which will happen within 10 business days, spokeswoman Carol Skornicka said.
Some Midwest passengers, shareholders and Midwest Air Group CEO Tim Hoeksema have wondered whether such a deal 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.
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 has nominated three members to Midwest's nine-member board of directors.
"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.
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
(SUBS 6th graf to correct 52-week high to $14.75 sted $42.75.)
