AirTran extends Midwest bid

NEW YORK (Reuters) - AirTran Holdings Inc. AAI.N said on Thursday holders of nearly 57 percent of Midwest Air MEH.A shares backed its hostile takeover bid, but Midwest said the offer was still inadequate.

"We view the significant level of tenders to date as a ringing endorsement of the business plan," said AirTran Chief Executive Joe Leonard in a statement. "We would expect Midwest's management to take this as a serious vote of no-confidence."

But Midwest said the $389 million bid does not take into account Midwest's long-term value as a stand-alone airline.

"It doesn't change anything," said Midwest spokeswoman Carol Skornicka. "The board continues to remain steadfast in its view that the offer is inadequate."

AirTran's bid hinges on Milwaukee-based Midwest waiving the provisions of a Wisconsin law that protects companies from hostile takeovers.

AirTran said 13.9 million Midwest shares, or 56.6 percent of its equity, were tendered under AirTran's cash and stock offer that expired on Thursday. AirTran on Thursday extended the offer, which is currently valued at about $15.89 a share, to June 8.

Midwest shares were up 1.99 percent at $15.40 on the American Stock Exchange.

AirTran, the 10th-largest U.S. airline by revenue, has been seeking to acquire its rival for months and has raised the bid twice.

The current offer consists of $9 in cash and 0.5842 shares of AirTran common stock for each Midwest share.

Orlando, Florida-based AirTran, parent of low-cost carrier AirTran Airways, made its initial offer worth $290 million in October and publicized it in December. It raised the offer to $345 million in January and then to $389 million in April.

Midwest has asked investors to pass on the bid and has offered a stand-alone expansion plan that calls for additional routes and fleet replacement.

AirTran shares were up 1.78 percent at $12 on the New York Stock Exchange.

(Additional reporting by Chris Reiter and Kyle Peterson)