AirTran Airways executives pushed for a bigger payout for shareholders over weeks of meetings with Southwest Airlines and were weighing potential options for alternatives just days before approving the merger deal.
But they concluded AirTran didn’t have any options for other merger partners, according to a filing with the U.S. Securities and Exchange Commission. It offers a few new details about the pending deal that will put Southwest in Atlanta for the first time.
Southwest’s chief executive, Gary Kelly, first called Bob Fornaro, his counterpart at AirTran, last April 21 to launch merger discussions, the filing says.
Southwest offered $6.50 a share and AirTran countered with $8 a share, before the two sides settled on the $7.25 to $7.75 range that was part of the final deal announced in September.
At an AirTran board meeting in Atlanta on Sept. 21, AirTran financial advisor Morgan Stanley presented background on the airline’s efforts to grow, “and discussed its views regarding the lack of any other potential merger partners or financial buyers for AirTran.”
Among the reasons AirTran agreed to the deal, according to the filing, were the risks and competitive position of standing alone “in a consolidating, competitive industry,” and management’s view that “there were no realistic other potential candidates for an alternative business combination transaction.”
Terms of the deal were hashed out in late September and on Sept. 26 the boards of each airline approved.
Shareholder and regulatory approvals are pending, with an AirTran shareholder meeting set for March 23. According to the filing, several state antitrust officials have asked for information, but Georgia’s attorney general’s office, which does not have an antitrust section, is not among them.
AirTran and Southwest face several shareholder lawsuits seeking to block the deal and last week reached a memo of understanding to settle two of them. Details weren’t in the filing, but it said the deal called for additional disclosures to shareholders, along with payment of attorneys’ fees. The settlement would resolveclaims challenging the merger, according to the SEC filing.