Qantas proposed buyout fails, for now

The proposed $9 billion buyout of Qantas failed to attract, in time, enough shareholder support but Airline Partners Australia isn’t giving up yet. The consortium says making a renewed offer is a possibility.

Airline Partners Australia, the private equity consortium proposing to take over Qantas Airways, failed to receive, in time, a 50 percent shareholders’ acceptance rate it was counting on to advance the A$11 billion ($9 billion) buyout. But the consortium is not giving up, especially after gaining, after the offer deadline, just over 50 percent of shareholders’ acceptance.

US billionaire Samuel Heyman-controlled hedge fund, which holds about 10 percent of Qantas, decided to sell about half his stake less than 5 hours after the deadline, according to several media reports.

“In view of the fact that a majority of Qantas shareholders (including late acceptance) lodged acceptances for APA’s offer, APA is exploring a number of alternatives including the possibility of making a renewed offer for Qantas at A$5.45 per share,” the consortium said in a statement today.  

APA, the Macquarie-led private equity consortium that includes Texas Pacific Group, Allco, a local private equity and finance company and Onex did not offer further details in the statement but a spokeswoman hinted that more will be unfolded in the near term.

Heyman’s late acceptance also prompted the consortium to appeal for an offer extension, an application the takeover regulators had rejected over the weekend. The group did not receive a minimum level of shareholder acceptance at a clearly-defined deadline that would have extended the offer for another two weeks to reach 70 percent for an unconditional deal.

“As at 7 pm AEST on 4 May 2007 it appears that acceptances have not reached the 50% level required to extend the offer,” the consortium said in an e-mailed statement late Friday.

On Monday, the consortium acknowledged that “applications to and discussions with regulators since the Friday deadline under Airline Partners Australia’s offer have not resulted in APA being able to include a late acceptance which would have resulted in a two week extension to APA’s offer.”

The appeal was made on grounds that “APA may have met the 50 percent threshold prior to the scheduled close of the APA Offer and thus the APA offer may have been extended by the operation of s624 (2) of the Corporations Act.”

The review panel, in a separate statement, concluded that it was a situation the consortium should clarify on its own, and not a matter for the panel to determine.

Qantas has also requested for a halt in the trading of its shares until Tuesday, 8 May, and all eyes are on the pending stock performance. The airline shares closed at A$5.38 on Friday, ahead of the deadline.

The proposed Qantas sale had flown into initial resistance from unions and local politicians but backed by the airline’s management and the Australian government.