AirTran Holdings Inc. raised its bid for rival Midwest Air Group Inc. on Thursday by almost 18 percent to about $345 million after the regional airline rebuffed an earlier offer last month.
The new offer is equivalent to $13.25 per Midwest share, based on the closing price of AirTran common stock on Monday. The bid represents a premium of almost 3 percent over Midwest's closing share price of $12.90 on Wednesday.
The offer consists of $6.625 in cash and 0.5884 shares of AirTran common stock for each Midwest share. The offer from the parent of discount carrier AirTran Airways through subsidiary Galena Acquisition Corp. was due to expire Feb. 8.
AirTran, based in Orlando, first bid $11.25 per share on Oct. 20 in a private overture to the Milwaukee-based carrier, but had said it was prepared to increase its offer. This time, AirTran took its pitch directly to Midwest shareholders.
AirTran Chairman and Chief Executive Joe Leonard said in a letter to Midwest's board that it wasn't easy to increase the offer. He said in another statement that Midwest's management refused to negotiate with AirTran over a merger and refused to share nonpublic financial information.
"However, we are willing to take this step because we fully believe that a combined AirTran and Midwest, whose shareholder base will consist of holders of both of our companies, will generate the value needed to justify our increased offer," he said.
Carol Skornicka, Midwest's senior vice president of corporate affairs, said the company's board "won't be engaged directly in responding" to the offer. She said it "was somewhat surprising that they would go directly to shareholders at this stage."
"We expected that they would do something. They said they would be back. This is kind of an accelerated process," she 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.
"It is clear to most stakeholders that AirTran Airways can grow Midwest Airlines, expand the Milwaukee market and add more destinations and service beyond what Midwest can achieve independently," he said in the statement.
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On the Net:
Midwest: http://www.midwestairlines.com
AirTran: http://www.airtran.com
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