The $11.1 billion takeover for Qantas has moved into its last throes with the bidding group, Airline Partners Australia, offering accepting shareholders accelerated payment and refusing to extend to the offer past its closing date of Friday week, March 4.
In a statement issued late yesterday APA said it would accelerate payment to five business days and provide all shareholders with withdrawal rights, giving them the chance to back out of the offer before it goes unconditional.
That follows the loss of over 64 million of shares from APA’s Institutional Acceptance Facility last week (and a small increase in acceptances from smaller holders of Qantas shares).
APA’s holding fell from 30.1 per cent at the start of last week to 27.48 per cent on Thursday night. Another update on the level of acceptance is expected this morning.
This latest move comes after the consortium this month restructured the offer to boost its chance of success by lowering the minimum acceptance condition to 70 per cent.
APA also revealed plans to rip billions of dollars in dividends and fees out of Qantas, should it get to its 70 per cent acceptance level.
It was a crude attempt to stampede big institutions, such as Balanced Equity and UBS Asset Management, who have resisted the bid and the $5.45 price offered, into accepting the offer.
But it rebounded as institutions withdrew millions of shares last week: a move APA’s PR team claimed represented big shareholders wanting to sell their shares on the market.
Offering accelerated payment and refusing to extend the offer was to force big holders to either accept or reject the offer.
The early payment is an attempt to stop the drain of shares out of the acceptance facility for institutions: they will now be paid five business days after the bid closes instead of 30 days or more.
APA director and public face, Bob Mansfield said the offer would close at 7pm (AEST) on May 4.
“APA is aware that an overwhelming majority of small and large Qantas shareholders support the offer. Now, it is time for those supportive shareholders to accept. If the bid fails the share price will almost certainly fall,” he claimed in the statement.
If APA’s voting power in Qantas increased to more than 50 per cent after April 27, there would be an automatic statutory extension of the offer on May 4 for 14 days, he said.
Shareholders who accept the offer before it becomes unconditional will be paid by the later of five business days after the deal goes unconditional on May 4, APA said in a statement.
Shareholders who accept on or after the date it becomes unconditional will be paid five business days after their acceptance is received, it said.
“We believe that our cash offer of $5.45 per share is full, fair and reasonable and shareholders have had ample time to assess it,” Mr Mansfield said.
APA’s offer had been recommended by the Qantas independent directors and the independent expert had reported that the offer was fair and reasonable, APA said.
Mr Mansfield said that the accelerated payments should be welcomed by all shareholders
Early payment should be attractive “especially to the majority of Qantas shareholders (by number) who have already accepted the APA offer and are clearly interested in securing full payment as soon as possible”, he said.
“By bringing forward the shareholder payments there is a significant incentive for shareholders to accept quickly so that the offer can be declared unconditional and they can be paid quickly.”
According to Friday’s shareholding notice retail acceptances had risen 0.12 per cent to 12.27 per cent.
Qantas shares rose 1c to $5.37 on Friday. Credit Suisse disclosed it had raised its stake in the airline from 7.2 per cent to 8.54 per cent, thanks to buying on behalf of clients.
