Qantas bid still in doubt

Top aviation journalists Kate Askew and Scott Rochfort report in the Brisbane Times that APA’s bid for Qantas is still in doubt while APA’s Chairman Bob Mansfield is appealing to Qantas shareholders to accept its $11.1 billion offer in a last-ditch attempt to save the ailing deal, warning the takeover faced certain collapse if acceptances did not lift.

He said it was “almost certain” the Qantas share price would fall if its bid fell over, with Mr Mansfield’s comments coming as APA ramped up its advertising campaign today.

However, this sentiment flies in the face of comments by one of Qantas’s largest shareholders who has championed refusal of the offer, Balanced Equity Management.

Andrew Sisson’s Balanced Equity Management owns about 4% of Qantas shares and Mr Sisson told the ABC’s Inside Business yesterday, “At the beginning, we were fairly close to the price we thought was reasonable, but things that have happened since then mean we are a long way from the price.” 

He added, “In fact, we think it 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 he believed the bid would get up, however, he “couldn’t be sure”.

He also hinted that he could be attracted if APA came back with a higher second offer, on the proviso it was pitched at $6.45 or more.

The APA consortium has expressed confidence it will secure 50% of Qantas by this Friday, which would automatically extend the takeover by another fortnight.

Despite securing only 12.57% of Qantas’s shares, sources close to APA pointed to BHP Billiton’s takeover for WMC and the Toll takeover for Patrick which were only decided in the final day.

Others also point to the failed takeover attempts of Flight Centre and Bendigo Bank and to others where shareholders rejected bids.

APA’s $5.45 a share offer has become less attractive to some Qantas shareholders in the five months since it was launched, thanks to the overall rise in the sharemarket and the airline posting three profit upgrades.

Another problem for APA are the growing expectations of a fourth profit upgrade and the big rise in the share prices of Qantas’s rivals.

APA boasts of offering a 30% premium to Qantas’s share price before news of the bid first surfaced but Virgin Blue shares have risen 50% while Air New Zealand shares have more than doubled in the period.

APA is arguing its offer is a record price for Qantas but in addition, airlines such as Singapore Airlines and Virgin Blue have already seen their shares hit record highs in recent weeks, with the Bloomberg World Airlines Index – which measures 37 airline stocks worldwide having risen 32% since the Texas Pacific and Macquarie Bank consortium approached the Qantas board last November.

The upbeat sentiment surrounding the aviation industry in Australia was also bolstered last week when the Macquarie Bank’s Sydney Airport reported a strong quarterly profit, thanks to a strong increase in passenger numbers with the airport reporting a 13% lift in pre-tax profits for the March quarter.

“I think the outlook is very positive,” Macquarie Airports CEO Kerrie Mather told the Heraldm saying the rise in passenger numbers played a big part in the airport’s increased profits and it had been done despite the low level of new capacity being introduced in the past few years.

Ms Mather said the airport’s outlook had been bolstered by the introduction of new services by Jetstar into Asia, Etihad, Emirates and Virgin Blue to the US.

Report by The Mole with material from the Brisbane Times and The Sydney Morning Herald.