Northwest, TPG to buy Midwest


#1

TPG and Northwest airlines will be buying Midwest airlines for a value of $16 a share.

NWA calls themself a passive investor. :unamused: :unamused:

TPG has turned around many airlines like Continental and America West

kansascity.com/business/story/230418.html

Thoughts??


#2

Midwest should be calling up AirTran quickly to o.k. the merger with them. IF Northwest were to acquire Midwest, that would be the kiss of death not only for that airline (and its service), but for MKE as well. Why would NWA keep any major presence in an airport right smack in between their two largest hubs??


#3

Customer service, of course.

Oh wait. This is an airline we are talking about. Nevermind!!!


#4

NWA is in this for one reason: keep Airtran out of the midwest. If Airtran were to buy Midwest, they would have routes in the midwest and would steal frequent fliers from NWA (NWA can’t offer rock bottom fares and it seems like a travelers loyalty is its wallet). And if Airtran established itself, Jetblue and Southwest may follow and invade the midwest with low fares. With NWA buying Midwest, they can keep a monopoly in the midwest with high fares. NWA loves Midwest because YX keeps out Jetblue, Southwest and Airtran. They aern’t saving Midwest, they are saving themself (and their hubs which could have been invaded in the future).


#5

IMHO, I don’t think that NW is involved…they have too much on their plate to be concerned with Midex…an airline that isn’t a match to their business model. TPG just see’s an opportunity to invest ia a solid company while relieving Midex from the hositle takeover bids from Airtran. With TPG, Midex still gets to do their own thing and maintain their culture, where as with an Airtran takeover/merger they lose an identity that have great pride in creating. Again, …just thinking out loud here…


#6

I don’t have any problem with low fares in the Midwest… Maybe because I live in the Midwest…


#7

Looks like Airtran raised the bid to 455 million after saying they were finished with Midwest. They claimed the shareholders persuaded them to up the bid. Will Joe just give up???

The more I think about it, I think Airtran is in it for the planes. Even if they (airtan) are expanding MKE, YX still have lots of 717’s operating in Kansas City. They most likely will take those and expand in the east.


#8

Midwest accepts TPG deal for 17.00 a share. Can anyone say monopoly at MKE.
forbes.com/feeds/ap/2007/08/ … 29264.html


#9

I just may miss the mark on this one…time will tell…

From the Associated Press:

MILWAUKEE (AP) Northwest Airlines Corp. could end up owning rival Midwest Air Group Inc., which has agreed to a $450 million buyout offer from private equity firm TPG Capital.

Northwest is a passive investor in the deal and may eventually buy Midwest outright, TPG partner Richard P. Schifter said in a conference call Friday morning.

The equity firm may want to cash out of the deal some day, he said, and Minneapolis-based Northwest could become the sole owner. Schifter said such a move could be several years away.

Midwest’s decision to sell to TPG came late Thursday night and ended months of back-and-forth with another rival, AirTran Holdings Inc.

Midwest said TPG will pay $17 per share cash, worth about $450 million based on Midwest’s 26.6 million shares outstanding.

Orlando, Fla.-based AirTran’s hostile takeover attempt of Midwest stretched back two years to an initial bid of $78 million in June 2005.

Its last offer, a cash-and-stock deal, was worth about $16.04 a share, or $427 million.

AirTran Chairman and CEO Joe Leonard said Friday in a statement that he had hoped to reach a consensual agreement with Midwest but added, “we accept the Midwest board’s decision.”

AirTran shares rose 22 cents, or 2.2 percent, to close at $10.19 on Friday, while Midwest shares ended up 85 cents, or 5.8 percent, at $15.55 after rising to a 52-week high of $16 earlier in trading. Northwest shares rose 18 cents to $16.16.

Northwest approached TPG about joining in a buyout of Midwest, Schifter said.

“We concluded there was a combination that would make sense and began in earnest frankly just a few weeks ago,” he said.

Northwest is a minority investor in the deal, said Schifter, who would not disclose the airline’s level of involvement. Northwest spokesman Darren Shannon declined to comment.

The deal is subject to antitrust approval. Midwest Chairman and Chief Executive Timothy E. Hoeksema has said the company worked with lawyers to ensure it would pass. He said they would begin discussions with federal officials in the next two weeks.

Northwest has said it would not participate in Midwest’s management should the TPG deal go through.

Northwest accounts for about 18 percent of the traffic at Milwaukee’s Mitchell International Airport and is the second-largest carrier behind Midwest. More than half of the flights leaving from Milwaukee are Midwest.

TPG Capital, formerly Texas Pacific Group, has invested in other airlines, including Continental, America West and Ryanair. Schifter said it would have many options if it eventually wanted to sell its stake in Midwest, including selling it back into the public market.

The firm typically holds investments for several years so a deal, including a sale to Northwest, would most likely be years in the making, Schifter said. It took more than 11 years for TPG to sell its stake in America West, he said.

“It frankly will depend upon circumstances somewhat beyond our control in how the airline performs and how the industry evolves,” Schifter said.

Hoeksema said Midwest was pleased with the transaction but did not comment specifically on Northwest’s involvement.

“I think our shareholder base feels this is a very good outcome and that we worked diligently to pick the offer that had the best value and the most certainty,” said Hoeksema, who expects the deal to close in the fourth quarter.

It will need shareholder and regulatory approval, both of which are likely but not certain, Robert W. Baird analyst Craig Kennison wrote in an investors note Friday.

Some people who own both AirTran and Midwest stock may vote against the transaction “to rekindle merger discussions,” he wrote.

But breakup fees, such as the $13.5 million Midwest would have to pay to terminate the deal, could discourage opposition, he said.

Regulators also could be concerned about Northwest’s involvement, although Kennison doubted they would block the deal.

“We believe the political will is behind an independent Midwest, which boosts the odds of approval,” he wrote.

Midwest had pledged to remain independent, and TPG deal will allow it to keep its own name and management. AirTran had said it would merge Midwest under the AirTran name.

Hoeksema and Schifter said Midwest and Northwest could combine some purchases, such as fuel, to save money.

Richard Hurowitz, chief executive of one of Midwest’s largest shareholders, Octavian Advisors, said he was glad of the outcome and TPG’s involvement.

“They’re the most sophisticated airlines investors in the world,” he said.


#10

Richard Hurowitz, chief executive of one of Midwest’s largest shareholders, Octavian Advisors, said he was glad of the outcome and TPG’s involvement.

Of course, they made all that money. Months ago, he insisted that YX was better as an independent airline. Then Airtran raised the bid and he turned against Midwest.

I fear the worst for Midwest. TPG will change the dynamics of the airline (taking out signature seats, etc.) and will sell to NWA in 3-6 years (which is an easy way for them to sell the airline).
TPG’S track record is excellent but they would be doing a disservice to their people to not change the business plan of Midwest, and lower the cost structure, maximizing profits. In the end, NWA will own Midwest, will shut down the best care in the air and will continue with its monopoly in the midwest part of the country. :imp: :imp:

FROM FLYERTALK:
the deal: sec.gov/Archives/edgar/data/ … /exh21.htm
Also, its sounds like Tim, yx CEO is looking to open a third hub. But where?


#11

It’ll be very sad indeed… :frowning: