D-day is today for the Airline Partners Australia group trying to buy Qantas in that controversial $11.1 billion offer.
The bid is due to close at 7pm Sydney time tonight and APA will be hoping that it can get its hands on at least 20 per cent of the airline’s outstanding shares, to give itself the chance to get a two week automatic extension of the bid.
That will enable it to move towards (and from its point of view, past) the 70 per cent minimum acceptance level.
That will be around 370 million shares, worth around $2.2 billon at a minimum. Just how much will flow through the market and how much will go off market through electronic acceptance, remains to be seen.
One holder, Balanced Equity won’t be accepting for its four per cent stake and all eyes will be on that other hold out, UBS Asset Management whose management has indicated (but not on the record) that it is opposed to the $5.45 price.
But with hedge funds owning an estimated 35 per cent, there’s every chance APA will get to 50 per cent and then 70 per cent.
According to a notice lodged with the ASX yesterday shareholder acceptances for the APA’s bid rose by seven per cent in a day, from, 25.94 per cent to 32.96 per cent.
APA said its voting power over Qantas shares had risen to 27.78 per cent, from 17.63 per cent.
Shares held under an institutional acceptance facility – where institutions have the right to withdraw their acceptance – had fallen to 5.19 per cent from 8.31 per cent as of Wednesday.
Around 17 per cent of Qantas shareholders are thought to be retail investors and it’s believed that 10 out of the 17 per cent have accepted the APA offer.
The other 83 per cent of shares are held by institutional investors and hedge funds.
If you look at other big offers: the BHP Billiton bid for WMC Resources and the Toll bid for Patrick Corporation, there was a flood of acceptances on the very last day.
The APA consortium includes Macquarie Bank, Allco Finance Group and Allco Equity Partners, US private equity group Texas Pacific Group and Canada’s Onex Group.
Qantas shares were four cents higher at $5.38 yesterday.
Federal Transport Minister Mark Vaile did his little bit for APA yesterday by sinking another attempt by Singapore Airlines to sneak on to the lucrative trans-Pacific route in competition to APA, sorry, Qantas..
Singapore Airlines used figures released this week showing demand across the Asia-Pacific route is growing faster than available seats to try and get a foothold in competing with Qantas and United Airlines of the US.
The trans-Pacific has been one of the drivers behind Qantas’ better than expected financial performance.
Yesterday Mr Vaile said he had no plans to grant Singapore access to the route. In fact he was downright pro-Qantas and Virgin Blue.
“The government has reaffirmed that it has no plans to revisit the issue of rights for Singapore Airlines to operate beyond Australia to the United States for some time,” a spokesman for the Minister was quoted as saying.
He said the imminent arrival of an offshoot of Virgin on the route would alleviate any capacity constraints.
“In recent years, we have seen strong growth in international passenger numbers in the Australian market, with annual growth averaging 4.4 per cent over the past 10 years.
Virgin Blue has said it will buy seven Boeing 777-300 ER aircraft from Boeing with options for a further six planes.
The first planes will be used by Virgin Blue to launch its United States service late in 2008.
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May 18 is Rinker’s big day.
That’s when the recommended ‘final’ $US15.85 a share offer from Cemex of Mexico will close.
Two weeks from today; and there’s no sign Perpetual Trustees, or perhaps Australian Foundation Investment Co or Argo Investments will accept, even though the company has warned that earnings could be lower next year if the US housing slump persists.
All through the bid (more than nine months) it’s been business as usual for Rinker and its management. It has spent around $200 million in a number of bolt on buys in the US and this week revealed another deal, this time in Las Vegas, Nevada.
In a statement Rinker said the supply contract will see a major new quarry operation that will lift aggregates production in the Las Vegas region by more than 40 per cent.
“The new quarry operation will source its aggregates raw feed under a long-term supply agreement with Chemical Lime Company of Arizona (“Chemical Lime”) – processing and marketing around two million tons a year of high quality limestone aggregates from Chemical Lime’s Apex quarry operation in Las Vegas.
“The Apex site is about 25 miles (40 kilometres) north of the Strip and adjacent to Interstate 15. Aggregate reserves at Apex are extensive.
“The supply agreement is between Rinker’s US subsidiary (“Rinker Materials”) and Chemical Lime. Chemical Lime is a subsidiary of the privately-owned Lhoist Group, based in Brussels, Belgium.
“Rinker Chief Executive David Clarke said the Chemical Lime agreement would significantly expand the existing Las Vegas operations – the second major expansion of that business in recent months.
“In January, Rinker announced the acquisition of the aggregates and concrete producer JR & Sons Ready Mix, in the St George area of Utah, about 120 miles (190 kilometres) north-east of Las Vegas. JR & Sons is now part of the Rinker Materials Las Vegas business.”
Now is a good time to be doing things in the US housing and construction supply industries.
Times are tough, sentiment is down and companies with deep pockets or with clever deals can position themselves very nicely at lower than expected prices, for the upturn, which is clearly what Rinker is doing.
It’s why Perpetual and other holders see long term value in Rinker shares a
