A$11.1bn Qantas bid experiences turbulence

Determined activist investors are holding to ransom the A$11.1billion ($9.2billion) bid byAirline Partners Australia the Macquarie-led consortium for Australian airline Qantas.

Airline Partners Australia, the Macquarie-led consortium stalking Qantas appears to be in difficulties as the deadline for the group’s offer looms on Friday.

TPG, Allco Finance Group, Allco Equity Partners and Onex are also members of the consortium. Their A$5.45 a share recommended cash offer is under pressure even though Airline Partners Australia said in a statement the consortium had a voting power in Qantas of 12.57 percent.

According to UK newspaper the Financial Times acceptances from institutions have fallen to below 13 percent from 15.3 percent meaning the consortium only has 25.51 percent total acceptances to its bid. This is below the 70 percent it needs to win the bid by Friday and it is also short of the 50 percent compliance needed under Australian law to automatically extend the bid by a fortnight.

The FT said hedge funds are believed to hold more than 40 percent of Qantas’ stock. These activist shareholders are almost certain to decide the fate of the deal despite more than 50 percent of public shareholders by number supporting the bid.

Australian business luminary and consortium member APA’s director Bob Mansfield said in a statement: “Despite public comments by one or two vocal shareholders, a clear majority of Qantas shareholders (by number) have accepted the offer and want it to succeed.”  

More than 10 percent of Qantas shares are owned by two determined non-sellers, UBS Global Asset Management, and Andrew Sisson from Balanced Equity Management. Balanced Equity Management’s Sisson told US TV channel ABC on Sunday that his firm was committed not to accept the bid on grounds of price.   

Mansfield claimed if shareholders do not accept the bid, Qantas’ share price will fall.

At 4.10 pm AT Qantas’ share price was down 0.38 percent at A$5.30.
Macquarie declined to comment.