More hassle for the APA and Qantas bid
With the APA bid for Qantas on the brink of collapse, with the buying consortium meeting frantically to come up with contingency plans, according to a substantial shareholder notice filed last night, UBS Global Asset Management has been increasing its shareholding in Qantas by approximately 1.2 million shares or 6% .
Having been increasing its ownership of the business since December the buying spree has also been boosted by UBS’s broking division also purchasing Qantas shares with the various UBS’s divisions now owning 10.4% of Qantas.
With Balanced Equity Management’s Andrew Sisson confirming that he is rejecting the APA offer, UBS Global Asset Management’s has also said that it intends to reject the offer, but has not yet made that official.
If the APA deal does not go ahead the consortium, in what is considered a scaremongering tactic is claiming that Qantas shares will collapse, but analysts say that is unlikely to happen, with Qantas shares yesterday closing at $5.09, still well below the offer price.
A report in the Sydney Morning Herald from a trading report by Goldman Sachs JBWere says, “The stock seems to have solid support in the $5 region,” with JP Morgan saying, “These alternatives could include lowering the 90% minimum acceptance condition, launching a new bid, and walking away from the deal altogether,”, adding, it appeared “unlikely” that APA would meet its 90% minimum acceptance condition.
However, the Sydney Morning Herald says that it understands the consortium faces the prospect of its debt financing falling over if it does not get 90% acceptances for Qantas shares, with the core group of international banks behind the facility having the various components of the loans secured against Qantas’s main assets and that banks will walk away from the deal without this backing for their loans.
JP Morgan also said that the probability of APA giving up the Qantas bid altogether was looking “increasingly likely”, saying, “If that happened, it expected “selling pressure and possibly short term volatility” and adding, “We would expect Qantas shares to settle around $4.80 to $5 per share,” with JP Morgan having a price target for Qantas of $5.68 a share.
Report by The Mole
John Alwyn-Jones
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