Key Qantas shareholder won’t accept bid
Reports in the Age and The Sydney Morning Herald over the weekend say that one of Qantas Airways Ltd’s key institutional shareholders says it is committed not to accept the current $11.1 billion takeover bid for the national carrier because it falls a long way short of a reasonable price.
The founder of Balanced Equity Management, Andrew Sisson, said there was no likelihood of accepting the current bid put forward by the Airline Partners Australia (APA) consortium before the offer closes on Friday, May 4.
APA is offering $5.45 in cash per Qantas share and has lowered its minimum shareholder acceptance condition to 70%, from 90%.
“We are committed not to accept the bid,” Mr Sisson told the ABC’s Inside Business program.
Asked at what price Balanced Equity would sell, Mr Sisson said: “At the beginning, we were fairly close to the price we thought was reasonable. Things that have happened since then mean we are a long way from the price”.
Mr Sisson said the current APA offer did not represent a very good price, adding, “In fact, we think it (Qantas) represents one of the better value stocks in the market at the moment, so we would be a buyer rather than a seller”.
Mr Sisson said that when the Qantas board recommended that shareholders accept the APA bid in December last year, the offer price was probably reasonable and certainly defensible given Qantas’ profit estimates and the level of the general share market at the time.
But since then the market had climbed around 14% and the airline’s profit estimates had risen by 36% for 2007/08 compared to estimates in August last year.
Mr Sisson said another dollar added to the bid per share would put it “in the right ballpark”, adding, if the bid collapsed, Qantas could still continue on and be of good value and if APA gained 50% to 70% of the airline, that could also be a good situation for Qantas shareholders.
“The bid I think will get past 50% (of shareholder acceptances), but we can’t be sure,” he said.
If APA’s voting power in Qantas increased to more than 50% after April 27, there will be an automatic statutory extension of the offer for 14 days, on May 4.
The APA consortium includes Macquarie Bank Ltd, Allco Finance Group Ltd and Allco Equity Partners Ltd, US private equity giant Texas Pacific Group and Canada’s Onex Group.
The consortium said that as of Friday, April 27 it had a voting power in Qantas of 12.57 per cent and the offer had been accepted by more than half of Qantas shareholders by number.
APA spokesman Bob Mansfield said major investors usually waited until the last week before accepting offers to ensure they retained control of their investment for as long as possible.
“If the offer fails, it is almost certain that the Qantas share price will fall,” he said.
Qantas shares closed three cents lower at $5.32 on Friday.
A Report by The Mole, from AAP, The Sydney Morning Herald and The Age.
John Alwyn-Jones
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