Midwest Air Group , parent company of Midwest Airlines, has signed a definitive merger agreement to be acquired by an affiliate of TPG Capital, L.P. in a transaction valued at approximately $450 million.

Published: 16 Aug 2007

Midwest Air Group , parent company of Midwest Airlines, has signed a definitive merger agreement to be acquired by an affiliate of TPG Capital, L.P. in a transaction valued at approximately $450 million.

The merger agreement was unanimously approved by the Midwest Air Group Board of Directors.

Under the terms of the agreement, each outstanding share of Midwest’s common stock will be converted into the right to receive $17.00 per share in cash.

Timothy E. Hoeksema, Chairman and CEO said the agreement preserves the airline’s status as Milwaukee’s hometown airline and the popular Midwest Airlines brand for Midwest’s loyal customers and employees.

The transaction is expected to be completed in the fourth quarter of 2007. All financing for the transaction is in the form of equity and has been committed. No debt financing is required. The transaction is subject to approval by Midwest’s shareholders, as well as other customary conditions, including anti-trust approvals.

The agreement with TPG came at the conclusion of a process in which TPG and AirTran were each asked to submit a “best and final” offer by noon Central time on August 16, 2007. At that time, TPG submitted its $17.00 per share proposal.

The TPG proposal was weighed against a proposal from AirTran of $16.27 per share in cash and AirTran stock.

Northwest Airlines Corporation will be a minority passive investor in Midwest Air Partners, LLC, the entity formed to acquire Midwest.

Post deal, Joe Leonard, Chairman and CEO of AirTran Airways said, “We sought to acquire Midwest because we believe joining the two airlines would have created a unique, efficient, truly national low-cost carrier with tremendous benefits for shareholders, communities and employees. We hoped the Midwest board would come to share our vision and reach a consensual agreement - just as a majority of Midwest shareholders recognised the value in our strategic plan. However, we accept the Midwest board’s decision.”

“AirTran will continue our focus on growth -- a strategy that has produced eight consecutive years of profitable expansion. We sought to acquire Midwest because a merger made strategic and operational sense - and we pursued a deal vigorously, and for the right reasons,” he said. “But AirTran doesn’t need to merge with any other carrier to achieve our business goals.”

(On December 12, 2006, the last trading day before the public announcement of AirTran’s indication of interest in acquiring Midwest, the per share price of Midwest’s common stock was $9.08. Midwest has approximately 26.6 million shares outstanding, including shares subject to options, restricted share awards and outstanding warrants).