Midwest Insists It Is Not Entering Into Negotiations

Midwest Air Group, the parent company of Midwest Airlines, has been fending off takeover advances by AirTran Holdings, Inc. for awhile now.

The carrier has long contended it is more profitable as a solo act... but its shareholders may be waivering.  As ANN reported, its shareholders, much to Midwest's chagrin, voted to allow three of AirTran's people to hold Midwest board seats.

Now that they're in the boardroom, the low-fare carrier will pitch its case again Monday, according to the Houston Chronicle. AirTran Chairman and Chief Executive Officer Joe Leonard, along with other executives, will make a presentation and then open the floor to questions over a three-hour period, he said, hoping to dispel such rumors as massive job cuts at Midwest's Milwaukee headquarters.

The latest offer is worth $389 million in cash and stocks, and Leonard wants the board to set aside feelings and listen objectively.

"I think the board has got to get over it and I think they will get over the emotion and look at this from a business standpoint," he said.

Shareholders like Richard Hurowitz, chief executive officer of Octavian Advisors LP, Midwest's largest shareholder, have wanted this kind of meeting to happen. He hopes it will prove pivotal in advancing the deal.

"We're happy to see that they're actually sitting down, though we think they should do more than just listen. They should be engaging in negotiations at this point," he said. His hedge fund owns 6.6 percent of Midwest shares.

Carol Skornicka, spokesperson for Midwest, insists Monday's meeting is not one of entering into any kind of negotiations. She said the company merely realized shareholders want them to consider the deal.

"We felt the results of the proxy contest and the election of new directors signaled the shareholders would like us to at least listen to AirTran and that's what we intend to do," she said.

Sixty-five percent of votes cast at Midwest's June 14 shareholders meeting went to AirTran's slate for the board of directors. Midwest Chairman and Chief Executive Officer Timothy Hoeksema announced the board decided to allow AirTran to make a presentation even before results were announced, as ANN reported.

Reportedly, more than half Of Midwest's shareholders have said they will tender their shares at the current offer of $15 per share, according to the Chronicle.

Leonard said AirTran won't raise the offer, and the issue now rests with the board.

"The shareholders have decided that's a fair price so the board doesn't have to consider what's a fair price," he said.

The latest offer expires August 10.

FMI: www.airtran.com, www.midwestairlines.com