Midwest Air Group
says it will create a committee to review strategic alternatives, including the hostile takeover bid by
Midwest shares rose sharply Tuesday, climbing 12.5% to $14.19, after the carrier said it has formed a committee "to explore strategic and financial alternatives that would serve to enhance value for the company's shareholders" and to make a recommendation to the board.
The committee is chaired by Sam Skinner, a former secretary of transportation, and also includes four board members.
The board hasn't changed its recommendation to reject the AirTran offer, the company said, but the committee will nevertheless talk with AirTran and "with other strategic and financial parties that have recently expressed interest in pursuing a transaction with Midwest." Those parties were not identified.
The move comes more than two years after AirTran first approached Midwest. In June, three candidates backed by AirTran were elected to the nine-member board. Two weeks ago, AirTran executives made their case to the board. Five days ago, Midwest reported disappointing second-quarter earnings.
"By providing AirTran and other interested parties with access to our confidential information and holding discussions with them, the board is pursuing a process to evaluate whether greater value can be delivered to shareholders through a near-term transaction," Skinner said in a prepared statement.
Last Thursday, Midwest said net income fell 47% and revenue per available seat mile declined 2.5%. On a conference call that day, AirTran CEO Joe Leonard declared: "I would guess, after looking at the lousy numbers they produced today, they would want to get together pretty quickly."