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Bidder accepts Qantas deal is dead as board ducks for cover
2007-05-08
The private equity group behind a bungled takeover bid for Qantas admitted the deal was dead Tuesday as the airline's board scrambled to distance itself from an offer it once praised fulsomely. The group's concession of defeat allowed Qantas shares to trade for the first time since Friday, with the market punishing the debacle that has played out since then by sending the stock down almost five percent. The Airlines Partners Australia (APA) consortium said it had valid legal claims that could revive the 11.1-billion-dollar (9.2 billion US) deal but had decided to avoid the uncertainty lengthy litigation would cause. "APA believes that Qantas shareholders need more certainty and, accordingly, it has determined that its bid should be treated as having lapsed on May 4, 2007," said the consortium led by Australia's giant Macquarie Bank. Australia's market regulator, ASIC, earlier cleared up any lingering doubts about the on-again, off-again bid with a formal declaration that it lapsed after failing to win support from 50 percent of shareholders by the deadline. However, APA said it was considering a fresh offer for the airline, potentially resurrecting a deal that has been declared dead then revived so many times that the Australian press has compared it to a Monty Python sketch. "It's the Qantas flying circus," the Sydney Morning Herald said on its front page, adding, "That bid's not dead, it's pining," in reference to the British comedy outfit's famous "Dead Parrot" skit. The Australian Financial Review laid much of the blame for the debacle at the feet of the once-vaunted Qantas board, which unanimously backed the bid even though analysts said it did not price in the boom in global aviation. "Magnificent 11 become a dead board walking," it said in response to calls that the directors and senior managers at one of Australia's most prominent companies stand down. The board meanwhile moved to distance itself from APA, issuing a statement saying the consortium could not automatically expect its backing for any new bid. "Any future offer would be treated as a completely new matter," Qantas said in a statement. Under-fire chairwoman Margaret Jackson said late Monday that the uncertainty was not of the board's making and added Tuesday that continuity and stability were vital for the airline. "This has been an extremely difficult process since the board recommended APA's bid to shareholders," Jackson said as the Australian Shareholders Association renewed calls for her resignation. Jackson also said Qantas was examining how many of its shares were in foreign ownership. The federal government asked for the issue to be clarified amid concerns that foreign hedge funds had snapped up the shares and breached the airline's 49 percent foreign ownership cap. "That is a legal obligation of the Qantas board, we expect Qantas to manage that," Treasurer Peter Costello said. "If the Qantas board hasn't done that, then the Qantas board will need to have a good explanation." Qantas shares fell 25 cents or 4.6 percent to 5.13 dollars after resuming trading, later recovering to close at 5.22 in a falling overall market. APA's concession that its six-month bid for Qantas was over in its current form put paid to a weekend of dizzying and confusing developments on the attempted takeover that left shareholders and analysts gasping for breath. The APA consortium comprises Australian companies Macquarie Bank Ltd, Allco Finance Group Ltd and Allco Equitypartners, as well as US buyout firm Texas Pacific Group and Canada's Onex Corp.
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