By Emmet Oliver and Mary Schlangenstein
May 17 (Bloomberg) -- AirTran Holdings Inc., a low-fare carrier, said it won the support of 57 percent of Midwest Air Group Inc. shareholders in a hostile takeover bid for the airline, enough to extend its tender offer to June 8.
More than 13.9 million shares were tendered as of late yesterday, AirTran said in a statement today. The previous tender deadline expired at midnight.
``It looks more probable that the deal might be done,'' Ray Neidl, a Calyon Securities analyst in New York, said in an interview today. ``Fifty-seven percent is a big percentage of the stock to have tendered.''
AirTran is offering $9 in cash and 0.5842 of an AirTran share, or about $15.88 at yesterday's closing price, for each share of Oak Creek, Wisconsin-based Midwest. AirTran, based in Orlando, Florida, wants to diversify beyond its Atlanta hub and has boosted its bid twice from the $11.25 a share it first offered on Dec. 13.
Midwest shares rose 22 cents to $15.32 at 10:04 a.m. in American Stock Exchange composite trading. Shares of AirTran rose 13 cents to $11.92 in New York Stock Exchange composite trading.
The tender results prompted two of Midwest's biggest shareholders to urge the airline to begin talks with AirTran and avoid a confrontation at Midwest's June 14 shareholder meeting, where AirTran is offering a slate of three directors.
`The Time Has Come'
``We do not believe going through a proxy contest at the annual meeting -- a contest that Midwest appears likely to lose -- is the best way to combine these two great airlines,'' Richard Hurowitz, chief executive officer of New York-based Octavian Advisors LLC, said in a statement. ``The time has come for this transaction.''
Octavian is the largest Midwest shareholder, with a 6.6 percent stake. Jamie Zimmerman, the head of New York-based Litespeed Management LLC, Midwest's third-largest shareholder, at 5.5 percent as of March, also urged that talks begin.
AirTran, which is about three times larger than Midwest, called the number of shares tendered a ``vote of no confidence'' in Midwest's management, while Midwest dismissed the results as relatively meaningless.
``We don't find these results to be overwhelming,'' Midwest spokeswoman Carol Skornicka said in an interview today. ``The tender offer changes nothing and these results change nothing. At the end of the day, the board remains in total control over whether a transaction occurs.''
Midwest, which flies chiefly from Milwaukee and Kansas City, Missouri, has spurned AirTran's takeover bid, citing a Goldman, Sachs & Co. fairness opinion calling AirTran's latest offer of $389 million on April 2 ``inadequate.''
Wisconsin law allows Midwest directors to consider the interests of employees, suppliers, customers and communities, not just those of investors, when they review the bid, Skornicka said last month.
``The main factor that could intervene now is the Wisconsin law,'' Calyon's Neidl said. ``The board is behind Midwest management's desire to remain independent. It looks like the stockholders are moving more and more toward an AirTran combination.''
Midwest's board yesterday again urged rejection of AirTran's offer, saying ``shareholders would be left with shares of a consistently underperforming stock in a commodity carrier that provides inferior service.''
The comments came in a proxy statement in advance of the annual meeting and the board challenge by the AirTran slate.
That vote could have more impact than the tender offer because a successful AirTran slate would affect board discussions, Skornicka said yesterday.