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It's no pie in the sky: AirTran-Midwest merger talk looks serious
Goldman Sachs on board as financial adviser
December 28, 2006
BY MARY WISNIEWSKI Business Reporter
Midwest Air Group's hiring of Goldman Sachs as its financial adviser shows that the low-cost Milwaukee airline is seriously considering a $290 million merger proposal from AirTran Holdings, and may try to increase it. "I wouldn't be surprised if they're trying to up the offer," said Marisa Thompson, an AirTran specialist at Morningstar.
She said Midwest will likely use the adviser to get as much value out of the offer as possible without giving away too much proprietary information. "It's going to be a song and dance," said Thompson.
Earlier this month, Midwest refused an $11.25 per share offer from Orlando, Fla.-based AirTran. Midwest's share price has soared since the offer became public Dec. 13, with Midwest closing Wednesday at $11.88.
Midwest, which has increased its marketing in the Chicago area, said the company wants to stay independent.
AirTran made its offer public in the hope of swaying Midwest shareholders. The high-pressure courtship has continued, with AirTran announcing last week that its labor unions support the deal.
"We have said publicly that we would increase the offer if they could demonstrate additional value," said AirTran spokesman Tad Hutcheson. "We want them to say yes. It would make two great airlines even better."
A Midwest spokeswoman said hiring Goldman Sachs gives the airline a "number of options to consider" in its financial strategy and provides counseling on a number of fronts, including the AirTran offer.
"Our current position is that the offer is inadequate," said spokeswoman Carol Skornicka. "We haven't heard anything since then."
"Goldman Sachs will help us with another offer if it should come forward, but so far there hasn't been anything," said Skornicka.
Last week, Midwest said it had reached an agreement with SkyWest Airlines to operate 50-seat regional jet service beginning in April. SkyWest will operate between 15 and 25 planes for Midwest, adding new destinations and increasing frequency of existing routes.
Brian Nelson, who covers Midwest for Morningstar, said Midwest wants to analyze its stand-alone plan as well as its potential for a merger.
"We do think this deal is going to get done," Nelson said. "This is going to be a great deal for Midwest."
The combined companies would be worth $3 billion, and grow to $3.5 billion over the next couple of years, according to AirTran.
Midwest's share value has risen nearly 31 percent since AirTran announced the merger offer and nearly 148 percent in the last year
Goldman Sachs on board as financial adviser
December 28, 2006
BY MARY WISNIEWSKI Business Reporter
Midwest Air Group's hiring of Goldman Sachs as its financial adviser shows that the low-cost Milwaukee airline is seriously considering a $290 million merger proposal from AirTran Holdings, and may try to increase it. "I wouldn't be surprised if they're trying to up the offer," said Marisa Thompson, an AirTran specialist at Morningstar.
She said Midwest will likely use the adviser to get as much value out of the offer as possible without giving away too much proprietary information. "It's going to be a song and dance," said Thompson.
Earlier this month, Midwest refused an $11.25 per share offer from Orlando, Fla.-based AirTran. Midwest's share price has soared since the offer became public Dec. 13, with Midwest closing Wednesday at $11.88.
Midwest, which has increased its marketing in the Chicago area, said the company wants to stay independent.
AirTran made its offer public in the hope of swaying Midwest shareholders. The high-pressure courtship has continued, with AirTran announcing last week that its labor unions support the deal.
"We have said publicly that we would increase the offer if they could demonstrate additional value," said AirTran spokesman Tad Hutcheson. "We want them to say yes. It would make two great airlines even better."
A Midwest spokeswoman said hiring Goldman Sachs gives the airline a "number of options to consider" in its financial strategy and provides counseling on a number of fronts, including the AirTran offer.
"Our current position is that the offer is inadequate," said spokeswoman Carol Skornicka. "We haven't heard anything since then."
"Goldman Sachs will help us with another offer if it should come forward, but so far there hasn't been anything," said Skornicka.
Last week, Midwest said it had reached an agreement with SkyWest Airlines to operate 50-seat regional jet service beginning in April. SkyWest will operate between 15 and 25 planes for Midwest, adding new destinations and increasing frequency of existing routes.
Brian Nelson, who covers Midwest for Morningstar, said Midwest wants to analyze its stand-alone plan as well as its potential for a merger.
"We do think this deal is going to get done," Nelson said. "This is going to be a great deal for Midwest."
The combined companies would be worth $3 billion, and grow to $3.5 billion over the next couple of years, according to AirTran.
Midwest's share value has risen nearly 31 percent since AirTran announced the merger offer and nearly 148 percent in the last year
