WisBusiness: Investment firm could sell Midwest to Northwest eventually

By Patrick Fitzgerald

For WisBusiness.com

On the heels of Midwest’s disclosure that it has agreed to be acquired by TGP Capital for $17 per share, Richard Schifter of TGP on Friday courted the possibility of a sale to Northwest as an exit strategy for the private equity firm.

Schifter said in this morning’s conference call with analysts and journalists that TGP’s agreement with Northwest “contemplates that as a possibility,” but remained open to other exit options for TGP when they look to sell Midwest.

“Its clear Northwest is a passive minority investor, but potentially could be interested in acquiring Midwest at some point in the future,” said Schifter.

Schifter also dismissed any notion that TGP would be interested in any other airline industry acquisitions, saying “we have no intention at this stage to explore further consolidation.”

Midwest chairman Tim Hoeksema was optimistic that the deal would receive regulatory approval, though some industry officials have said it might be teetering on the brink of anti-trust issues. Hoeksema said the board had spent “a lot of time with attorneys, and that the Department of Justice would probably look at this as if it were an actual merger.”

However, Hoeksema remained confidant that the deal would pass without trouble, citing Mitchell International’s business model and the even playing field among competing airlines.

“There is strong competition on Milwaukee, there are no barriers to entry, there is lots of airport capacity, and the airport has a competition plan,” said Hoeksema. “The airport vigorously recruits more airlines and service, so even if there were increases in fares, there is the potential for new airlines to come in.”

Hoeksema did say that the Midwest board will not be dissolved and that Northwest would have no access to profitability information, commenting that “no Northwest representatives will be on the board, and there will a couple from TGP.”