Crikey tells it the way they see it !
Don’t you love the approach www.crikey.com.au takes to issue such as APA’s bid for Qantas, often saying everything that many of us would like to say – ever so succinctly!
In Wednesday’s www.crikey.com.au Stephen Mayne, who sold 100 Qantas shares at $5.33 on Wednesday morning, gives his view of the bidding process and where it goes from here!
Qantas shares are up 12c to a record high of $5.32 in a stronger market this morning on the back of the Government’s conditional approval of the sale, however, the biggest hurdle of all remains to be cleared – institutional shareholders.
The AFR’s Brett Clegg is on the case this morning demanding that Qantas release a 2007-08 profit forecast that would allow all investors to make a fully informed decision. Fair call.
Australia’s institutional investors are proving harder to win over these days. Lazard scuttled the Flight Centre privatisation last month and Investors Mutual and Lazard last week left German car parts giant with only 75% of Pacifica.
Perpetual is talking tough about rejecting Tony O’Reilly’s $6.10-a-share private equity-backed privatisation of APN News & Media and then we have the $11 billion question about Qantas.
UBS asset management boss Paul Fiani finds himself with the biggest conflict in Australia this morning.
He controls 5% of Qantas and has been outed as believing the $5.45 bid price is too low. However, his investment banking bosses across the Chinese wall will make $40 million in fees if the deal goes through.
There’s a lot on the line for all concerned.
If Fiani sells and is perceived to have pandered to the desires of the investment banking department, he might find a flood of institutional money pours out the door.
Similarly, if Fiani is pressured by his bosses and resigns himself, he could set up his own boutique like Peter Morgan’s 452 Capital and have billions under management within weeks, especially from the union-affiliated industry funds which value independence very highly.
One slight difference with Qantas is that investors who believe the offer price is too low can easily get exposure to the upside by buying shares in Allco Finance (up 51c to $10.86 this morning) or Allco Equity Partners (steady at $4.15) which will together own 34.3% of the company if the takeover goes through.
Treasurer Peter Costello yesterday claimed the undertakings were the most comprehensive ever obtained in such a takeover, but history is against him.
Rio Tinto gave a raft of commitments to the Keating Government when CRA was effectively transplanted to London in 1995 but then walked away a couple of years later and the Howard Government did nothing about it.
What would a Rudd Government do in similar circumstances?
You can bet your bottom dollar that Rudd’s chief business adviser, Rod Eddington, also a director of Allco Finance, would be first in the door if the barbarians wanted to take this route.
A report by The Mole from www.crikey.com.au
John Alwyn-Jones
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