Another down day for Qantas shares yesterday. They shed 7c over the day to close weaker at $5.09, with turnover of 46.6 million shares.
That wasn’t as big as the rough day Monday when more than 70 million shares were traded and the shares lost 8c.
The shares touched a low of $5.04, then struggled back to $5.14 and then fell in a late sell off before the close as investors continued to fret about the chances of the $11.1 billion Airline Partners Australia bid failing because of institutional opposition.
A one day senate inquiry in Canberra allowed some amazing tales to be retailed, such as Qantas using day release convicts in Singapore to wash its planes. Qantas was amazed and rejected it but the day didn’t add to the general store of knowledge about the bid and allowed opponents to vent their opposition.
It did provide some unsettling moments though when Qantas pointed out that a proposed piece of legislation to stop Jetstar and other businesses being moved out of Australia, would force Qantas to close its New Zealand, Singapore, Pacific and London operations. That response came from a senior Qantas executive.
What’s complicating the situation is the attitude of the shareholders opposed.
Originally there was one, UBS Asset Management; then Balanced Equity firmed up and took the holding in the airline to around 9.5 per cent.
Then suggestions the value investor, Maple Brown Abbott might be opposed. Like the other two they are not commenting. Analysts point out that if MBA was included, it would take the trio’s combined Qantas holding to 13.5 per cent, enough to block the bid.
Hence the softness and the swings in the price. The $5.04 price was the lowest the Qantas share price has been for three months.
APA’s offer of $5.60 per Qantas share, which includes a special dividend to be paid by Qantas of 15 cents, closes on April 3. The net price is $5.45.
Qantas share have declined from $5.32 a week ago to yesterday’s close.
The danger for the trio of institutional investors is that their blocking of the bid would see the price fall back to around $4.10 or $4.20, subject to what the oil price was doing.
APA said yesterday it now held 15.25 per cent of Qantas under its offer, up from 13.14 per cent late last week.
The share prices of prospective owners of Qantas were weaker yesterday. Allco Equity’s shares fell 3 cents to $4.21, Allco Finance stock declined 47 cents to $10.60 and Macquarie Bank slipped 85c to $80.75.
Meanwhile Rebel Sport shares closed unchanged on $4.25, compared to the Archer Capital offer of $4.60, ahead of the shareholders meeting in Sydney tomorrow. The fate of the bid remains uncertain.
But will the new bout of market instability force these institutions to take the money and run?
