Busiest day for selling Qantas shares for more than 100 years.
Qantas shares had their busiest day in more than two years yesterday, with over 100 million changing hands yesterday as arbitrage investors took positions before the proposed $11 billion takeover of the airline.
There is also mounting speculation investors are losing confidence in the Macquarie Bank led bid for the carrier.
While the Qantas board last month voted to accept an offer of $5.60 a share from a consortium of private equity investors led by Macquarie Bank and Allco Equity Partners, investors were yesterday happy yesterday to take as little as $5.29 for their stock rather than wait several months to receive the extra 31c.
Qantas closed down 1c at $5.29 yesterday, with 110.6 million shares changing hands – their busiest day’s trading since September 2004, when British Airways announced it was selling its 18.25 per cent stake in the airline.
The frantic trading came two days after Qantas’s largest shareholder, the US-based fund manager Capital Group, announced it had sold 22.7 million between December 28 and January 4, reducing its stake in the airline from 11.6% to 10.4%
Commonwealth Securities analyst Cassandra Meagher told the Australian that the huge turnover was likely the result of arbitrage investment, where traders seek to exploit differences in price for an asset, rather than a sign that the market was losing confidence that the Qantas sale would go ahead, adding, “It comes down to the discount versus the time value, how long they’ll have to hold on to the shares”.
She added, “The major funds can get out now and invest in something that makes a bigger profit over the next two months.”
The Federal Government, considered the main potential obstacle to the success of the bid, has said it would impose conditions on the bid to preserve jobs and maintenance facilities but has not given any indication that the overall purchase would be opposed, with the Government having the ability to block the transaction using its foreign investment review powers if it considers the sale to be against the national interest
Transport Minister Mark Vaile said earlier this week that while the Government might impose conditions on the Qantas bid and that it also intended to maintain the regulatory protection that had kept competitors such as Singapore Airlines from servicing the lucrative trans-Pacific route between Australia and the US, this suggesting that the Government is well disposed towards the bid consortium.
Report by The Mole
John Alwyn-Jones
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