The Macquarie and TPG-led consortium trying to buy Qantas, an Australian airline, suffered a major setback yesterday after one of the company’s biggest shareholders rejected their A$11.1 billion (€6.7 billion; $9.0 billion) offer.
Balanced Equity Management, which owns a 4 percent stake, said the consortium’s A$5.45 per share bid was too low. The news sent the Qantas share price tumbling as fears grew that the buyout bid could collapse.
UBS Global Asset Management, another large shareholder with a 6 percent stake, is also likely to reject the bid, according to Australian Financial Review.
Since the consortium needs to control 90 percent of the stock before it can buy out the minority shareholders, the deal would fall through if both fund managers voted against the deal.
Macquarie responded by extending the consortium’s offer deadline until April 20. The Australian bank has already insisted that the bid is final, precluding an increased offer.
Qantas shares closed down 3.1 percent at A$5.06 on Friday, well below the proposed offer price.
The bid has faced a number of obstacles. The Australian government refused to approve the deal until it received assurances that the carrier would not pass out of Australian hands. As a result, TPG is taking a unusually small stake by its standards, and acting in conjunction with Australian investment groups Macquarie, Allco Finance, Allco Equity Partners, and Onex.
So far the group has received acceptances from about 50 percent of shareholders, accounting for about 30 percent of the stock.
TPG has substantial experience in the airline sector, having previously invested in Continental, Ryanair, and America West. It is currently on a short-list of five for Italian airline Alitalia, and has been linked this week with a possible bid for Spanish carrier Iberia.