Midwest to Take Off With TPG Capital, Northwest

Midwest Air Group said Monday it will pursue a $16/share all cash offer (more than $400M) acquisition deal with TPG Capital, rather than a $389M hostile bid from AirTran Airways. The deal with TPG includes a passive investment with number-five U.S. airline Northwest Airlines, with whom Midwest has a codeshare alliance. TPG said the deal is not subject to financing conditions, a plus given difficulties in closing other private equity deals resulting from problems in credit markets. Midwest said it expects to sign a definitive agreement by Wednesday. Northwest said it has no plans to participate in management or control of Midwest. AirTran, which had a hostile bid outstanding and already has three representatives on Midwest's board, said it was abandoning its pursuit, saying its sweetened $15.75/share cash and stock bid was final. Although TPG said it anticipated no regulatory problems, AirTran said antitrust concerns could be raised given Northwest's participation. Northwest already has a substantial presence in the Milwaukee are where Midwest is based.

Sources: Press release, Reuters, Wall Street Journal
Commentary: 21 Airline Stocks to Keep You Flying High This Summer • Midwest Air /AirTran Merger Update
Stocks/ETFs to watch: MEH, NWA, AAI

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