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Group concedes defeat in $9B Qantas bid
2007-05-07
A 10.8 billion Australian dollar ($8.9 billion) takeover bid for one of the world's best-known airlines, Qantas, finally collapsed on Tuesday, taking the company's share price down with it. Shareholders -- believed to include international hedge funds that stockpiled Qantas shares recently in hopes of making quick profits on the takeover -- dumped the company's stock when trading resumed for the first time since a chaotic long weekend surrounding the buyout attempt. Qantas shares plummeted more than 4 percent to 5.13 Australian dollars ($4.23) from Friday's close of 5.38 Australian dollars ($4.44) before recovering to hover around 5.20 Australian dollars ($4.29) with more than 100 million shares traded in less than one hour. Analysts said they expected the shares to be extremely volatile for the immediate future, but noted that Qantas' underlying economic position was strong and the price would likely settle above the failed per-share offer price from Airline Partners Australia. APA, a private equity-backed group led by Macquarie Bank and U.S. buyout specialist TPG, said Tuesday it would not pursue a legal loophole that may have allowed it to reach a minimum shareholding threshold before a deadline last Friday. "APA has decided not to pursue arguments that it did achieve voting power in excess of 50 percent by the offer deadline," the group said in a statement. "APA believes that Qantas shareholders need more certainty and accordingly, it has determined that its bid should be treated as having lapsed on 4 May 2007." But APA said it may yet launch another bid for Qantas. Qantas Chairwoman Margaret Jackson, who faces growing pressure to quit for her strong support of the bid, confirmed the deal was dead. The "foremost priority of the board and management now was the continuing successful operation of the company," Qantas cited Jackson as saying in a statement. The government on Monday warned Qantas it must comply with laws that ban more than 49 percent of Qantas being foreign owned. Foreign hedge funds are widely believed to have bought heavily into Qantas in the days before the bid deadline last Friday. Treasurer Peter Costello said on Monday the foreign ownership cap must be complied with whether a takeover was under way or not. "We expect the Qantas board to manage that," Costello told reporters in Canberra. APA's announcement followed a tumultuous weekend for the bid. APA had until Friday night to win 50 percent of Qantas shares to get a two week extension to try and garner the 70 percent it needed to seal the deal -- which would have been one of the biggest takeovers in Australian corporate history. Shortly after the deadline, the group said it appeared to have fallen short of the threshold. Hours later, it said a single shareholder had agreed to sell enough shares to get the bid across the line, and asked corporate regulators to grant the extension. The Takeovers Panel, which rules on buyout disputes, and the Australian Securities and Investments Commission, rejected the appeal, saying Monday no exceptional circumstances existed that would allow APA to accept the late shares.
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