AirTran Airways Inc. finally got its long-desired meeting with Midwest Air Group Inc. on Monday. And after months of barbs fired between the two rivals in this hostile takeover battle, the most notable outcome of the meeting is the silence that followed it.
AirTran last December went public with an offer to buy Midwest now valued at nearly $400 million. The Florida carrier wants to use Midwest to build a nationwide discounter better able to compete in the highly cyclical airline industry.
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Over the last six months, the two airlines have engaged in a bitter war of words, painting the opposition as doomed to fail and accusing each other of deceiving shareholders and breaching fiduciary duty. The rhetoric has gotten so heated that some observers worry that Midwest has sullied AirTran's name in the target's home city of Milwaukee, making it less likely the deal would succeed if consummated.
But Midwest’s talk has failed to deter shareholders, who have tendered nearly 60% of their shares to AirTran and elected three AirTran-nominated directors to the company’s board. That election prompted Midwest’s board to schedule Monday’s meeting so AirTran could make its pitch in person, and presumably if nothing else provided both companies another chance to publicly poke holes in each other’s plans. Instead, neither company had much to say. AirTran told local reporters that the meeting was “cordial,” while Midwest said only that the presentation was a more detailed version of the proposal AirTran has made publicly.
Though it is possible the two companies have simply run out of things to say about the other, deal advocates view the silence as good news. AirTran is unlikely to want to come on too strong if it believes it is nearing support from a majority of directors, while Midwest would want to avoid boosting tensions ahead of potential negotiations that could lead to a higher price. Company watchers expect the Midwest board to give management a chance to rebut AirTran's presentation and restate its argument for remaining independent. After that, it will be up to the board to either invite AirTran for talks or continue on their independent track.
But until the hostility flares again, many in the industry are going to believe that AirTran's patience might finally be paying off and that the odds of a deal getting done are improving. —Lou Whiteman
See April 5 story from TheDeal.com
See June 14 story from TheDeal.com
See story Tuesday's story from The Atlanta Journal-Constitution
Tags: AirTran, airlines, travel, acquisition, deals, m&a, mergers
