APA’s Qantas bid takes another hit
Mathew Murphy, Aviation Reporter in the Age says that APA’s $11.1 billion takeover of Qantas has suffered another hiccup, with its stake in the company slipping after some institutional shareholders withdrew acceptances.
Analysts said it would cause concern about the takeover’s chance of success, but they predicted the shares would fall into the hands of hedge funds that would accept APA’s buy-out offer at the last minute.
UBS Global Asset Management, which regards the $5.45-a-share offer as too low, has continued to buy Qantas shares. It told the market its stake had risen from 10.4% to 11.4%.
The UBS rejection of the bid and indications from Balanced Equity Management that it was dissatisfied with the offer price led APA last week to lower the minimum acceptance level from 90% to 70% after it negotiated new loan terms with its financiers.
APA yesterday told the stock exchange its Qantas holding had fallen from 30.06% to 28.86%.
General acceptances had increased from 11.67% to 12.15%.
Sources said they believed US hedge funds were aiming to take advantage of the strong Australian dollar to draw short-term profits from the deal.
BBY aviation analyst Fabian Babich said it was not surprising some institutional investors wanted to cancel acceptances, given the share price, which yesterday finished down 1% at $5.37, was so close to the $5.45 offer.
“The numbers are disappointing for APA because the acceptance level is down and not up,” he said. “And, on the face of it, that decrease looks concerning so the overall reaction will probably be a bit negative.”
Qantas also released its first supplementary Target’s Statement, saying nothing had occurred under the revised bid to change the independent directors “unanimous recommendation that Qantas shareholders accept the Airline Partners Australia offer”.
The statement spelt out the implications for shareholders if they did not sell, including the possibility that they would have difficulty selling their shares if the stock became less liquid.
Mr Babich said he believed that fund managers such as Balanced Equity and UBS could be disadvantaged in the long run and be forced to accept a lower offer.
“They are playing a very risky game,” he said.
“They are hoping APA will come back months later with a higher offer.
“Qantas’ share price may go down and they could end up accepting at lower than $5.45.
“But just as governments don’t negotiate with terrorists, APA would not want to set a precedent that would see rogue shareholders derail future private equity bids.”
Report by The Mole from the Age
John Alwyn-Jones
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