Agreed, except for the 2.6% thing. Two very valid things the "NWA will do away with Midwest" camp should consider.
1. What Herb Kohl gives, he can take away (DOJ approval)
2. TPG will never just sell the 2.6% It will be all or nothing, or their remaining investment is nearly worthless. TPG enjoys the position of having this over NWA's head quite a bit and won't let that go for peanuts. If NWA wants control of YX they are going to have come up with the full nut.
That's probably correct. I just mentioned 2.6 percent because I thought that's all Northwest needs in order to get 50.1 percent and thus complete control of YX
. Looking at original post again, I see my math is wrong--NW has 47.2 percent now, which means they need to get 2.9 percent more of total shares to get control. Point being that Northwest is very close to control. When TPG does sell off, I'm sure NW
will happily pay whatever 'full nut' they need to to get control.
Because both NW's and TPG's motivations are the same, i.e. to realize returns in a small niche carrier, NWA does not need anyone to actively participate on the Board. Otherwise, anyone who thinks that putting up that kind of money to own that percentage of a company and not participate in day-to-day operations is deluding themselves.-Mike
Actually, I don't think TPG and NW
's motivations are the same. TPG is in it strictly, AFAICT, for the investment. NW
is in it to keep what you correctly called a "nonthreatening competitor" in place. YX
could probably lose small or even moderate amounts of money and NW
won't complain too much (TPG probably would, but if they became dissatsified and sold off early you know who would be knocking on their doors to buy). NW
needs, pardon the phrase, a non-LCC lapdog in place in MKE
to prevent a serious lower-cost competitor from shaking things up in the region. That's what their 47.2 percent, with the threat of more later, bought. I'm sure Hoeksma and Skornicka are very well aware of these facts.
Fortunately for the Cookie Palace, YX
seems to be breaking even and making some money, so NW
will probably just let them run things. NW
can claim to be 'passive' unless YX
gets more than moderately unprofitable--then they will very much want to participate in day-to-day operations, probably with TPG's blessing.
[Edited 2007-09-15 00:12:58]