Qantas accepts €6.7bn takeover offer

Australian national carrier Qantas Airways said today it had accepted a €6.7bn takeover offer from a private equity consortium including the country’s Macquarie Bank and the Texas Pacific Group.

Qantas chairman Margaret Jackson said the board had agreed unanimously to recommend to shareholders that they accept a new offer of €3.40 a share from the consortium.

Jackson said in a statement the new offer included the removal of unacceptable conditions, including a break fee payable to the consortium if the deal fell through because of government regulations or a lack of shareholder support.

“It is a very momentous and exciting day for Qantas,” Jackson said.

She said the bid price was 33% higher than Qantas shares were trading at before takeover speculation began in early November.

“The directors believe this offer allows Qantas shareholders to realise significant value for their shares that has not been fully recognised in the public market,” she said.

The board’s recommendation is subject to receiving an opinion from an independent expert that the offer is fair and reasonable. Another condition is that 90% of Qantas shareholders must approve the deal.

Jackson said that under the deal, Qantas would remain Australian-owned.

Bob Mansfield, the director of the consortium, called Airline Partners Australia, said it supported Qantas’ existing management and its plans for large capital expenditure.

The Australian Stock Exchange had earlier suspended Qantas trading, at the request of the company.

Qantas stock plunged 2.68% to 5.09 Australian dollars yesterday on the rejection of the earlier offer of 5.50 dollars per share, which Qantas said was too complex and included unacceptable conditions.

Australian finance company Allco is the biggest player in the consortium through Allco Equity Partners, which has 35% of voting rights, and Allco Finance Group, with 11%. Macquarie has around 15%.

Foreign investors are Texas Pacific Group with less than 15%, Canada’s Onex Corporation, with 9%, and unnamed other foreign investment funds, with less than 15%.

No single international investor would hold more than 15% and in total foreign investors would hold less than 40%.

Prime Minister John Howard said his government would keep an eye on the takeover to ensure it met the country’s foreign-ownership caps, set as part of the 1995 privatisation of the Sydney-based airline.

He said Australian laws would not be changed to accommodate the takeover, which he hoped would be in the airline’s best interest.

“I hope the Qantas we know is the Qantas we keep,” he said. “People like Qantas. It is an icon.”

Australian law limits foreign-ownership of Qantas at 49%, with each foreign individual allowed to hold a maximum 25% of shares. The bidding consortium says it plans to stay within those restrictions, with Onex and Texas Pacific Group together holding less than 40%.

The 86-year-old Qantas has suffered in recent years from soaring oil prices, but remains one of the few profitable global carriers amid stiff competition and widespread fear among travellers of terrorist attacks and health risks such as Sars and bird flu.

The airline’s stock has gained about 30% since speculation about the consortium’s bid first began in mid-November. It hit a seven-year high on Monday.