APA offer for Qantas going nowhere fast.
Terry McCrann in today’s Herald Sun says that the APA deal is indeed in formal terms, actually going backwards with APA’s ‘stake’ in the airline droppingfrom 30.1% to 28.9% over the past month.
Informally though, the momentum is building towards a denouement on the currently scheduled May 4 close.
That’s, ironically, two days after we find out whether we get an interest rate rise.
Margaret Jackson and the Qantas board are placing what pressure they can – in reality, not that much – on APA to bring the bid to a conclusion. Win, lose or draw.
But not much pressure’s required. The APA team see little point in stringing the bid out. Most of the players are committed one way or another.
So, left field events as always aside, the offer is now pretty much certain to reach its conclusion on May 4.
One such possible ‘event’ would be one or both recalcitrants deciding to accept. If APA was short of but effectively assured of 90 per cent, it would obviously extend. If, of course, it was ‘in time’.
But assuming the two recalcitrants, which hold a little over 10 per cent, stick to their guns, the key question is how much of Qantas APA ends up with.
Does it get close to 90 per cent? Does it finish just over 70 per cent? Indeed, what does it do if it gets less than 70 per cent?
The assumption is that the offer would be abandoned. Before last Thursday, it was 90 per cent — and thus full ownership — or nothing. Now it’s supposedly 70 per cent or nothing.
But is it? Could APA decide to take, say, 65 per cent of Qantas if that was all that was offered? Or even 51 per cent?
To my mind it should. There is nothing that 70 per cent could deliver that 65 or even just 51 per cent couldn’t either.
Apart, of course, from more cheap Qantas shares.
And the cost of having to pay more if and when APA moves to mop up the rest.
APA crossed the private equity Rubicon by being prepared to take partial ownership and continued stock exchange listing at 70 per cent. It’s not much of a stretch to do a lower figure.
Report by The Mole
John Alwyn-Jones
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