TPG Inc, the buyout firm that has invested in at least four airlines, and Northwest Airlines Corp agreed to buy Midwest Air Group Inc for more than US$395 million, keeping the regional American carrier out of the hands of rival AirTran Holdings Inc.
Midwest expects to reach agreement by August 15 on a US$16-a-share cash bid from TPG, the Oak Creek, Wisconsin-based company said in a statement late Sunday. Northwest said separately that it's providing financing for the bid and won't participate in running the smaller carrier.
The deal will allow Northwest to keep its marketing alliance with Midwest, which primarily flies from Milwaukee and Kansas City, Missouri. The smaller carrier earlier rejected a "best and final" offer of US$15.75 a share in cash and stock from AirTran, which had been pursuing Midwest since December in an effort to expand beyond its main Atlanta hub.
"This gives us an opportunity to maintain our code-share agreement with Midwest," Dean Breest, a spokesman for Eagan, Minnesota-based Northwest, said in a telephone interview. "We're a minority investor, and we'll have no role in the management of Midwest," he said.
Midwest had 24.72 million shares outstanding as of July 16, according to data compiled by Bloomberg News.
Northwest and Midwest agreed in May to let passengers book connecting flights operated by the two airlines to some cities using one ticket and to earn frequent-flier miles on either carrier. Northwest, the fifth-largest airline in the United States, has its biggest hubs in Minneapolis-St. Paul and Detroit.
The deal is "pretty close" to being completed, Midwest spokeswoman Carol Skornicka said by phone. AirTran's offers were "consistently inadequate," she said.
AirTran, based in Orlando, Florida, mainly flies along the US East Coast. It said that Northwest's involvement in the deal would likely raise antitrust concerns.
"The Midwest board has chosen a path that will benefit current senior management by selling out to a private equity firm," it said in a statement.
The US$16-a-share bid is 12 percent above the company's closing price of US$14.23 in New York on August 10.