Midwest is going private

Old Aug 12, 07, 9:44 pm
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Midwest is going private

Since the AirTran-Midwest meger seems to be history, I thought a new thread was warranted.

Per AirTran's press release:

"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.

It looks like it's a group of private equity investors and Northwest. I wonder if Joe Leonard will try to block the sale by raising anti-trust concerns???
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Old Aug 12, 07, 9:46 pm
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Originally Posted by BlueHorseShoe2000 View Post
Since the AirTran-Midwest meger seems to be history, I thought a new thread was warranted.

Per AirTran's press release:

"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.

It looks like it's a group of private equity investors and Northwest. I wonder if Joe Leonard will try to block the sale by raising anti-trust concerns???

I am not sure if this is the best idea. We will soon see what happens
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Old Aug 12, 07, 9:46 pm
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Originally Posted by BlueHorseShoe2000 View Post
Since the AirTran-Midwest meger seems to be history, I thought a new thread was warranted.

Per AirTran's press release:

"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.

It looks like it's a group of private equity investors and Northwest. I wonder if Joe Leonard will try to block the sale by raising anti-trust concerns???
Looks like the private equity firm topped AirTran's latest enhanced offer of 431 Million.
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Old Aug 12, 07, 9:50 pm
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Airtran did not rule out future talks so we will see how this "going private" thing plays out. It may work and it may not work. Who knows
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Old Aug 12, 07, 9:50 pm
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Hip-Hip Hooray!

As a long-term employee, I can tell you that this has been the longest and most trying time in my life. If this is true, then it is sweet justice to see an arrogant, snake-oil salesman get smoked!
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Old Aug 12, 07, 9:52 pm
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Yeah truths, enjoy having NW slowly dismantle YX. Even if YX is nominally independent, it seems NW is part of this deal and will surely have a significant stake in how YX continues from this point. The Midwest Express days are long since over.
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Old Aug 12, 07, 9:52 pm
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Originally Posted by truths88 View Post
As a long-term employee, I can tell you that this has been the longest and most trying time in my life. If this is true, then it is sweet justice to see an arrogant, snake-oil salesman get smoked!
Hold on. We do not know if this plan will go through.
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Old Aug 12, 07, 9:56 pm
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Originally Posted by CitrusMCO View Post
Yeah truths, enjoy having NW slowly dismantle YX. Even if YX is nominally independent, it seems NW is part of this deal and will surely have a significant stake in how YX continues from this point. The Midwest Express days are long since over.
NW has no redeeming qualities. That is a bad airline with bad people running it. You think Joe was bad, you have not seen anything yet. Those NW people are 50 times worse. I do not trust NW at all.
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Old Aug 12, 07, 9:56 pm
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Having Midwest selling their interest into a private equity firm, does not mean they are selling out. And let's not read Air Tran's buyout rejection reaction as how things will end up with Midwest. Sounds to me like Air Tran is really upset. Their comments are those of a spurned buyer.

What it all really reads to me is that things will go as status quo, which is what most people (in Milwaukee) want. Sure the 2X2 seats will be gone, but we'll still have a hometown airline we can call our own.
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Old Aug 12, 07, 9:57 pm
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Originally Posted by flyYX View Post
Looks like the private equity firm topped AirTran's latest enhanced offer of 431 Million.
It is TPG, formerly known as Texas Pacific Group, which made its name restructuring CO.
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Old Aug 12, 07, 9:58 pm
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Midwest's Response to AirTran

MIDWEST AIR GROUP BOARD OF DIRECTORS UNANIMOUSLY DETERMINES TO PURSUE $16 PER SHARE ALL-CASH OFFER FROM TPG CAPITAL

Milwaukee, Wisconsin, August 12, 2007 The Board of Directors of Midwest Air Group (AMEX: MEH), parent company of Midwest Airlines, today said that it has unanimously determined to pursue an all-cash offer from TPG Capital, L.P. on behalf of an affiliate of TPG and one or more partners to acquire all of the outstanding shares of Midwest for $16.00 per share.

The board took its action after receiving a letter from AirTran Holdings, Inc. (NYSE: AAI) in which AirTran stated it was making its best and final offer to acquire all of the outstanding shares of Midwest pursuant to a one-step merger for consideration consisting of cash and stock at $15.75 per share, valued at Friday's closing price of AirTran's common stock. In reaching that determination, the board concluded that the TPG offer presented greater value and certainty for Midwest shareholders than the AirTran offer.

Under the terms of the offer from TPG, the private equity investor indicated that its acquisition "would permit the Company to continue its rich legacy as a leading provider of customer oriented quality air service."

Midwest and TPG expect to execute a definitive merger agreement no later than August 15, 2007.

The offer from TPG is set forth in the following letter that was received by the Midwest board on August 12:

Board of Directors
Midwest Air Group, Inc.
6744 South Howell Avenue
Oak Creek, Wisconsin 53154

Ladies and Gentlemen:

TPG Capital, L.P. ("TPG") is pleased to submit the following indication of interest for an acquisition by TPG of Midwest Air Group, Inc., a Wisconsin corporation (the "Company"), for $16.00 in cash for each share of the Company's common stock.

We believe that our proposal offers a compelling opportunity for your shareholders and is superior to the proposal that has been submitted by AirTran Holdings, Inc. ("AirTran"). The proposed purchase price is an all cash offer, which, in light of the recent volatility in the United States equity markets, represents a more certain value for your shareholders than the large stock component of AirTran's proposal. In addition to providing more certain value, an acquisition by TPG would permit the Company to continue its rich legacy as a leading provider of customer oriented quality air service. Our acquisition would provide for greater stability and prospects for all of the Company's important constituencies including customers, employees and the greater Milwaukee and Kansas City metropolitan areas. We have been very impressed with your management team and are confident in its ability to maintain the Company's reputation of excellent service, while at the same time running a profitable airline.

We believe that our experience in this sector, together with our track record for maintaining stable, long term investments, argue strongly in favor of an acquisition by TPG. We are one of the largest private equity investors in the world and the most experienced private equity investor in the global airline sector. Investments carried out by us in and related to the airline industry include, among others, Continental Airlines, America West Airlines, Ryanair, Hotwire and Sabre. We are proud of the record that we and the management teams have accomplished in creating value in these companies.

Our transaction would be financed through contributions from TPG Partners V, L.P., a fund we manage with $15.3 billion of committed equity capital, and one or more partners, which contributions would be fully committed at the time of signing. The consummation of the transaction would not be subject to a financing condition, and we do not anticipate any issues in obtaining antitrust clearance or any other regulatory approvals, so we anticipate consummation would be subject only to customary conditions.

We are fully prepared to complete confirmatory legal and accounting due diligence and the concurrent negotiation of definitive documents on an expedited basis in order to execute a transaction by August 15, 2007.

This letter is an expression of interest only and any binding agreement would arise only upon execution of definitive agreements.

We are very excited about the prospects for this transaction, and we look forward to having the opportunity to work with you to finalize a transaction that we believe will benefit your shareholders and other constituencies. We are prepared to meet with you or your representatives at any time to discuss all aspects of our proposal.

Very truly yours,

TPG Capital, L.P.
By:
Name: Richard P. Schifter
Title: Partner
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Old Aug 12, 07, 9:59 pm
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Originally Posted by ccerts View Post
What it all really reads to me is that things will go as status quo, which is what most people (in Milwaukee) want. Sure the 2X2 seats will be gone, but we'll still have a hometown airline we can call our own.
This will be status quo for the moment. Expect significant management and strategic changes, which will hopefully include a change at the top.
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Old Aug 12, 07, 10:03 pm
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Originally Posted by ccerts View Post
Having Midwest selling their interest into a private equity firm, does not mean they are selling out. And let's not read Air Tran's buyout rejection reaction as how things will end up with Midwest. Sounds to me like Air Tran is really upset. Their comments are those of a spurned buyer.

What it all really reads to me is that things will go as status quo, which is what most people (in Milwaukee) want. Sure the 2X2 seats will be gone, but we'll still have a hometown airline we can call our own.
You do not know that. I think that Milwaukee missed a great opportunity to have an airport that is more than a regional airport. I am still going to have to drive to Chicago to get a reasonable fair to the west coast. I am sick of having to do that. This is a shining example of the Milwaukee inferiority complex.
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Old Aug 12, 07, 10:04 pm
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What will be interesting will be the degree to which NW will have control over YX. Will NW people be placed in upper management at YX? Will YX be slowly dismantled to less of a mainline carrier? And best of all, will Herb Kohl complain about anti-trust concerns, which are very real in this case given the market share NW and YX have at MKE combined, again dependent on the amount of control, if any, NW has over YX's operations, whether day-to-day or strategically over the long-term.

I think the ultimate lose 10 years down the road here will be YX employees and MKE. Midwest Express is done whether it was AirTran or Northwest, but at least AirTran was committed to building MKE further, thus ensuring jobs and n/s flights at low fares. Northwest is committed to neither, especially since they will now have pricing power at MKE. MKE may well become the new CVG.
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Old Aug 12, 07, 10:14 pm
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Originally Posted by CitrusMCO View Post
What will be interesting will be the degree to which NW will have control over YX. Will NW people be placed in upper management at YX? Will YX be slowly dismantled to less of a mainline carrier? And best of all, will Herb Kohl complain about anti-trust concerns, which are very real in this case given the market share NW and YX have at MKE combined, again dependent on the amount of control, if any, NW has over YX's operations, whether day-to-day or strategically over the long-term.

I think the ultimate lose 10 years down the road here will be YX employees and MKE. Midwest Express is done whether it was AirTran or Northwest, but at least AirTran was committed to building MKE further, thus ensuring jobs and n/s flights at low fares. Northwest is committed to neither, especially since they will now have pricing power at MKE. MKE may well become the new CVG.
Nowhere does it say TPG is doing this on behalf of NWA. Carol Scornika did not mention NWA in the news interview either.
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