APA purchase of Qantas foundering in heavy skies
As anticipated in TravelMole a number of weeks ago, APA is facing increasing challenges and problems in its purchase of Qantas, reflected in the announcement that the deadline for their $11.1 billion bid to purchase the flying kangaroo has been extended by APA for another month to April 3 2007.
The announcement comes as key shareholders are asking increasing questions about the deal and two in particular UBS Global Asset Management and Balanced Equity Management rejecting the offer price of $5.60, saying that the airline has been undervalued.
With UBS owning more that 6% of Qantas and Balanced Equity Management 4%, they could alone prevent the deal going ahead, but is it anticipated that other fund mangers will follow their lead, with APA needing to acquire at least 90% of the airline’s shares to go ahead, with scraping through at 90% considered to be insufficient.
To make matters worse, Qantas shares dropped 4c to $5.15 yesterday, 45c below the bid price, fuelling further speculation that the deal would not proceed, while APA also filed yesterday that they had now purchased 6.09% of bid class securities in Qantas.
APA’s bid also faces its first regulatory hurdle today with the ACCC ruling on the competition issues of whether the Macquarie Bank’s ownership of both Qantas and Sydney Airport expected to be announced.
The failed privatisation of Flight Centre has also created additional nervousness amongst managers, along with the market entry of Singapore and for that potentially read Singapore Airlines backed Tiger Airways, and Virgin Blue’s plans to launch a domestic low cost carrier in addition to its current “new age” airline and its international operation on Qantas’ highest revenue route, the Pacific.
The Foreign Investment Review Board response to Peter Costello is also due by March 7, 2007 and analysts suspect that APA is waiting for this announcement before moving forward, but this deadline can also be extended by up to ten days and further if the Treasurer wishes, which he may well do to avoid the Government having to make a decision, leaving it to others.
Report by The Mole
John Alwyn-Jones
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