Morgenson oversimplifies M&A

TheDeal.com executive editor Yvette Kantrow wonders why New York Times business columnist Gretchen Morgenson oversimplifies the complex issues behind Midwest Airways refusal to talk with AirTrain Airways about its unsolicited offer by focusing only on what shareholders might want.

Kantrow wrote, “Morgenson (who two years back produced a jeremiad on the evils of M&A in the Times Magazine) then describes the beauty of AirTran’s bid — the 65% premium to Midwest’s stock price last fall, its promise of new jobs — along with reasons why Midwest may have spurned it. The main obstacle, she concludes: Midwest chairman and CEO Timothy E. Hoeksema, who would likely lose his job if the airline is sold, without the benefit of a post-deal windfall.

“We don’t know if AirTran’s bid is good or not. But we do know there’s more going on than Morgenson lets on. First, Midwest’s customers are angry over a potential sale, citing the loss of its wide seats and baked-on-board cookies. Then there’s Milwaukee, which fears losing its status as a hub. But for Morgenson, the only constituency that matters is shareholders. But even there she’s less-than-forthcoming.

“What she doesn’t reveal is that two of Midwest’s four largest shareholders are hedge funds that bought into Midwest after AirTran announced its bid, hoping to make a quick buck on the sale. Morgenson goes out of her way to speculate on Hoeksema’s motives for not selling. Shouldn’t she say why some shareholders are so eager to sell?”

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