The following is a completely fictional account of the dialogue behind the scenes Thursday night at the meeting of the Midwest Air Group Inc. board of directors, which met to decide between agreeing to let the company be acquired by TPG Capital L.P. and Northwest Airlines Inc. or AirTran Holdings Inc. For the record, I have nothing but respect for Midwest chief executive Timothy Hoeksema and the other members of the company’s board of directors. The following essay is merely an attempt to capture the tone of some of the discussions as Midwest faced an uncertain future in recent months. Any resemblance to the actual dialogue between Midwest board directors at Thursday’s meeting is entirely coincidental.
Director #1: "Well, as you know, I’m of the mind that we did not build this company only to let it be taken away by these carpetbaggers from the South. I don’t like them, and I don’t like the way they do business. They’ll wreck our great airline."
Director #2: "I agree. I don’t like their CEO, and I don’t like the way they talk. They just rub me the wrong way."
Director #3: "Well, I was nominated to this board by AirTran, and they’re not so bad. Good people, really."
Director #4: "People, whether we like them or not is not the issue at hand. Our job, our duty, here is to decide what’s in the best interest of this company and its shareholders. Now, you may not like the fact that there is even an acquisition in play, but that’s the reality of being a publicly held company. So, the question is, are we better off being acquired by TPG/Northwest, or are we better off being acquired by AirTran?"
Director #1: "TPG."
Director #4: "Why?"
Director #1: "Because I don’t like those AirTran guys …"
Director #4: "Again, that’s got nothing to do with it. Go ahead and make a logical argument for taking the TPG offer."
Director #1: "Well, I don’t like them. But if you need more, OK. First, if we go with TPG, we’ll keep our company’s headquarters here in Oak Creek. Second, we’ll keep our company’s name. Third, we’ll keep our company’s brand. And fourth, we’ll keep our jobs. Heck, we’ll even keep our cookies."
Director #4: "Now, that’s better. That makes perfect sense. But what about the shareholders? How are they better off with TPG?"
Director #5: "Shareholders are better off because the TPG offer is an all-cash offer. There is no fluctuation, no market variable. It’s pure cash, baby. And don’t worry about the whole antitrust thing. The feds haven’t really done anything to stop anyone from acquiring anybody in decades. I mean, look at the telecommunications industry. Antitrust? How quaint! What do I look like here, Teddy Roosevelt?"
Director #3: "OK, but I say Midwest may have a better chance to grow by going with AirTran. Northwest doesn’t want to grow in Milwaukee. They’re just doing this to protect their own turf. If they get a piece of Midwest, then they win, no matter if passengers fly Northwest or Midwest. There will be absolutely no incentive for them to compete against each other on price or on destinations. Northwest is strictly in this to play defense. And have you looked at Northwest’s track record? It’s terrible! They just came out of bankruptcy. They have terrible, terrible labor relations. They don’t have good customer service. The AirTran model is far superior."
Director #4: "Fine, but how would our company grow by agreeing to be acquired by AirTran?"
Director #3: "Are you kidding me? AirTran already has ordered the most fuel-efficient, state-of-the-art Boeing airplanes around, and they can’t wait to bring them to Milwaukee. They’ve got to put them somewhere. As the price of fuel rises, they will have a significant competitive advantage, because their costs will be lower. AirTran will add flights here. AirTran will make Milwaukee a hub. It will add jobs in Milwaukee. Heck, with their low prices, they’ll even steal customers from Chicago."
Director #1: "There you go again. Milwaukee already IS a hub for Midwest. And we think we will add more flights here."
Director #3: "Get real. Look, you say TPG will keep our headquarters, our name, our brand and our jobs. Even our cookies. But you know as well as I do that they’re just in this for the short term. They’re going to buy us, and in five to seven years, they’re going to flip us. Then what? This company is going to taken over now. It’s just a matter of who you want to crawl into bed with here."
Director #1: "I really wish you wouldn’t draw that mental image. I don’t like those guys"
Director #3: "Sorry. But you’ve got to pick a partner."
FAST FORWARD:
Director #1: "This just in. TPG just bumped up its offer to $17 per share. All cash. That’ll seal it, I guess."
Director #2: "It’ll finally send those AirTran guys back to Orlando with their tails between their legs, too."
Director #3: "AirTran can’t jump any higher than that. That does seal the deal."
Director #1: "Still, this is a sad day. You can’t put a price on pride and blood and sweat equity. We’ve come too far. This really, really hurts. I just wish there was a way that us managers and our employees could come up with $450 million in cash and just buy our company outright and run it the way we want to run it, the way we’ve built it. Or I wish we could convince some local private player with deep pockets to partner with us and outbid these people, but the local players said the airline industry was just too speculative for their conservative Milwaukee tastes. So, that leaves us to choose between these two offers."
Director #4: "Are you through?"
Director #1: "Yeah. Let’s just vote and get this over with. This is breaking my heart."
Steve Jagler is executive editor of Small Business Times.
