Pequot Capital Management, a large shareholder in Midwest Air Group, said on Tuesday that it has "significant concerns" about the airline's decision to pursue a bid by TPG Capital and Northwest Airlines.
Midwest on Sunday accepted a $16-a-share bid by TPG and passive investor Northwest , spurning an increased offer made by hostile pursuer AirTran Holdings.
But Pequot Capital, which says it owns an 8.8 percent stake in Midwest, likely making the regional airline's largest shareholder, said AirTran's $15.75-a-share offer, which was raised from an earlier $15-a-share bid, may be better.
Pequot Capital says AirTran's proposal, which includes AirTran stock, has better prospects for Midwest and its shareholders.
"We believe an announced deal with Midwest would cause the value of the AirTran offer to exceed, in a very short time, that $16 indication of interest you have currently deemed superior," Pequot Capital said in a letter to Midwest's board that was filed with the U.S. Securities and Exchange Commission.
Pequot urged Midwest's board, which had steadfastly opposed AirTran's hostile approach for months, to reconsider its position.