May 08, 2007

Qantas board under scrutiny

THE QANTAS Airways board and senior management will come under scrutiny for their role in the collapsed bid for the Australian national carrier, ABN AmroCraigs client adviser Peter McIntyre said yesterday.

The buyout group bidding for Q a n t a s , w h i c h i n c l u d e s Macquarie Bank and private equity firm Texas Pacific Group, is said to be exploring alternatives, including a fresh $A5.45 a share offer after the collapse of its previous $A11 billion ($NZ12.4 billion) bid at the weekend.

Mr McIntyre said in an inter view that the board, particu larly chairwoman Margaret Jackson, would face some hard questions from shareholders over the role the directors played in supporting the col lapsed bid.

Qantas chief executive Geoff Dixon could escape censure because shareholders viewed him as a source of stability as the airline regrouped.

‘‘If Geoff Dixon leaves, this will just create further insta bility for the company,’’ Mr Mcntyre said.

The buyout group, Alliance Partners Australia (APA), said in a statement a majority of Qantas shareholders had now lodged acceptances for the offer.

‘‘APA is exploring a number of alternatives, including the p o s s i b i l i t y o f m a k i n g a renewed offer for Qantas at $A5.45 per share,’’ APA said.

The previous offer was also $A5.45 a share.

The world’s largest airline takeover bid failed after APA failed to reach the 50% level of acceptances needed to extend the bid by a deadline on Friday.

Australia’s Takeover Panel rejected an application by APA over the weekend to include late support from a major s h a r e h o l d e r who missed a deadline for acceptances.

A P A s a i d t h e l a t e a c c e p t a n c e brought it up t o 5 0 . 6 % . Reaching 50%, g a v e A P A another two weeks to gain t h e 7 0 % threshold for a successful takeover.

The Australian Securities and Investments Commission said yesterday it had also refused an application by APA over the same matter.

Mr McIntyre said analysts’ r e p o r t s f r o m A u s t r a l i a suggested that top politicians and union leaders were happy the deal had collapsed. The Australian budget was due out today and the takeover deal would have taken some of the media attention away from treasurer Peter Costello.

The collapse of the deal also showed that APA, and other privateequity funds, might have to lift their bids for take over targets.

‘‘I have been talking to a lot of investors today who are happy with the company and who want to be there for five or 10 years. They are saying that if they give up their shares, where will they place the funds? We know that private equity balance sheets have around 70% cash so there is a lot of cash washing around. Those funds might have to think about paying more if they want to succeed.’’

Shareholders would have noted the improved profit guid ance from Qantas and that analysts were picking an improved dividend. The $A5.45 offer was only a ‘‘modest premium’’ on the share price.

Qantas shares were placed in a trading halt early yester day.

Mr Costello said the future of Qantas was a matter for the current board, but repeatedly called on it to make a public statement regarding its plans.

‘‘A bid was put forward to buy Qantas shares which conformed with our require ment that there be majority Australian ownership.

‘‘When the time for the bid expired, the majority of share holders had not accepted it. The shareholders didn’t accept it. The bid fails. The bid is over.

‘ ‘ Q a n t a s i s n o w b e i n g managed by the same board, the same chief executives.

‘‘What they intend to do with Qantas is a matter for them and they should make a statement.

‘‘They have to now tell you what they intend to do with Qantas.’’

By Dene Mackenzie

No comments: