Midwest Air sought out suitors
MILWAUKEE -- Facing a hostile takeover by rival AirTran Holdings Inc., Midwest Air Group contacted several companies to persuade them to buy the airline instead, according to new regulatory filings.
A week after Midwest shareholders replaced three board members with a slate nominated by AirTran -- putting more pressure on Midwest to accept a deal -- the company's top executive called his counterpart at Northwest Airlines to see if the airline would be interested in a possible buyout, Midwest said in filings Thursday with the Securities and Exchange Commission.
That late June conversation between Midwest Chairman and Chief Executive Timothy E. Hoeksema and Northwest Chief Executive Doug Steenland "discussed Northwest's interest in exploring a possible transaction," the filings said.
On July 13, Hoeksema called David Bonderman, managing partner of private equity firm TPG Capital, to gauge his interest, the documents said.
The calls worked. AirTran's offers were spurned and TPG and Northwest eventually partnered on a $450 million cash buyout that Midwest accepted in August.
The filings were copies of letters sent to shareholders Thursday explaining the deal and calling for a special shareholders meeting Oct. 30 to put it to a vote. A majority of shareholders must approve the buyout, which will pay Midwest shareholders $17 a share in cash. The company has about 26.6 million shares outstanding.
Midwest anticipates shareholders will approve the deal, said Dennis O'Reilly, vice president of investor relations and Midwest's treasurer.
Midwest shares rose 11 cents to $16.45 Thursday.
AirTran first approached Midwest about a buyout in June 2005, offering the equivalent of about $78 million, or $4.50 a share. AirTran took the potential buyout public last December when Midwest's board spurned a sweetened offer of $11.25 a share, or about $290 million.
As months passed and the offers rose, Midwest looked elsewhere, according to the filings.
"Over the course of the next several months, we contacted a number of potential strategic partners," Midwest said in the filings, though it did not name companies other than TPG and Northwest.
Northwest spokesman Darren Shannon said Midwest's financial adviser, Goldman Sachs, also had a hand in bringing the three companies together and facilitating the deal. Midwest will pay Goldman Sachs $9.6 million for the advising services, the filings said.
Representatives of TPG and AirTran did not immediately return calls seeking comment Thursday.