Virgin Blue set to be sold………..
A report in the Sydney Morning Herald says that Virgin Blue looks set for its fifth major change of ownership in five years, after its controlling shareholder, Toll Holdings, provided its strongest hint that it is preparing to offload its 62 per cent stake in the airline.
“We continue to be of the opinion that being a long-term or controlling shareholder is not where we want to be,” the managing director of Toll, Paul Little, told the Herald yesterday. “We hope to be in a position to make an announcement before the end of the calendar year on which option we prefer.”
But he declined to say whether Toll could sell its stake via a share placement or find a buyer to snap up the stake.
While Mr Little said no final decision had been made, he said Toll could even retain a strategic corner stake in the carrier. “Maybe we could go from 62 per cent to 25 per cent,” he said.
Toll’s recent interest in forging a merger with the much larger Brambles has fuelled speculation it is keen to cash up and sell its stake in Virgin Blue.
It has been speculated Toll is keen to sell the stake given fears the entry of the Singapore Airlines-backed Tiger Airways on the domestic market could affect Virgin Blue’s earnings – and share price.
On Virgin’s current share price, Toll’s stake in the airline is worth $1.5 billion.
Toll originally entered into a deal to sell part of its controlling stake in Virgin Blue back to its founder, Richard Branson, when it launched its hostile takeover in 2005 for its then majority owner, Patrick Corp.
Under the deal, Mr Branson could have built his 25.1 per cent stake into a controlling stake for as little as $1.40 a share. Toll later backed out of the deal and as a consequence has seen its stake in Virgin appreciate more than $500 million.
After selling half of the airline to Patrick in 2002 for $260 million, before it was listed on the ASX in December 2003, Mr Branson lost joint management control when Patrick launched a full takeover in 2005. Patrick ended up with a 62 per cent stake.
There is talk Mr Branson is keen to buy back into the airline. Only last month he snapped up a strategic stake in the long-haul arm of the Malaysian low-cost carrier AirAsia, and Virgin placed a job ad two weeks ago for an “investment manager”.
Virgin Blue shares rose five cents to $2.35 yesterday, after the airline reported another set of strong traffic figures. It reported the percentage of seats it filled in August rose 2.3 points to 81.6 per cent on the previous August.
Report by The Mole and The Sydney Morning Herald
John Alwyn-Jones
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