MILWAUKEE - AirTran Holdings Inc. has withdrawn from negotiations to buy Midwest Air Group Inc., and will not renew its tender offer-signaling that Midwest Air has found a group of investors to help it fight off AirTran's hostile takeover attempt.
AirTran made that announcement at around 9 p.m. Sunday night. A separate announcement from Midwest Air, which operates Midwest Airlines and Midwest Connect, was expected to be issued later this evening. AirTran proposed to buy Midwest Air for $15.75 a share, based on the closing price of AirTran stock on Friday.
The offer consisted of $9.50 in cash-up from $9 in cash-and 0.5842 shares of AirTran common stock for each Midwest share. The total value of the purchase would have been more than $431 million.
"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, AirTran chairman and chief executive officer, in a statement.
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"For the good of our shareholders and crew members, we have terminated negotiations andallowed our tender offer to expire. At this time, we will focus our efforts on AirTran's strategic plan that has resulted in eight years of successful growth.
"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," stated Leonard.