TPG looks to Alitalia as Qantas deal comes under threat

Texas Pacific Group is reportedly mulling a bid for Italian airline Alitalia, amid indications that investors may be losing confidence in its Qantas deal.

Texas Pacific Group’s proposed take-private of Australian airline Qantas was cast into doubt today, after heavy trading in Qantas stock suggested some investors have lost confidence in the deal. The news came as the US buyout firm also emerged as a possible bidder for Italian carrier Alitalia.

Shares of Qantas were the most heavily traded on the Australian stock market today, with about 101 million shares worth A$534 million (€320 million; $416 million) changing hands. However, the share price remained stable, dropping just one cent to $5.29. The heavy trading was sparked by US fund manager Capital Group, which sold off about 23 million of its 229 million Qantas shares.

The consortium, which is led by Allco Finance Group and also includes Australian bank Macquarie, has submitted an offer of $5.60 a share for Qantas, valuing the airline at A$11.1 billion (€6.6 billion; $8.7 billion). However, it suffered a setback over the weekend when Australian deputy prime minister Mark Vaile said the government could block the deal in the absence of certain safeguards.

According to a report in the London-based Times newspaper, TPG may also emerge as a potential white knight bidder for Alitalia, an Italian airline valued at about €2 billion ($2.6 billion).

The buyout firm is well acquainted with the airline industry. In addition to the Qantas bid, it has also invested in Continental, Ryanair and America West.

Alitalia is expected to be the subject of a joint bid from Air France and KLM, who already own a 2% stake. Rothschild, a UK investment bank, is also reportedly putting together a consortium of Italian investors and two US private equity firms to bid for the carrier.

The Italian government is looking for proposed bids by the end of January.