The bid to takeover Qantas is dead.
The Takeovers Panel has effectively killed the Airline Partners Australia $11.1 billion bid for the airline in a conclusion reminiscent to the chaotic end of the cricket World Cup a week ago.
There we saw people not knowing the rules and play continuing in darkness.
With the Qantas bid we saw a group of highly paid (millionaires some of them) bankers, lawyers and others failing and then flailing about in a desperate attempt to keep the huge offer and the hundreds of millions of dollars of fees alive.
It was an unedifying situation and one that reflects badly on all involved at the airline, the bidding group and the hedge fund which sank the bid.
The panel late yesterday announced that it had refused to look at the matter after the APA had asked it to allow a late acceptance for the offer, which would have let the bid continue for another two weeks, giving it a chance to get to the 70 per cent minimum acceptance condition.
And late last night Qantas issued a statement after the board had met which accepted the offer was dead.
“On 4 May, APA announced that it did not receive acceptances representing at least 50 per cent of Qantas shares by the 7.00pm deadline and therefore the APA offer could not proceed,” Qantas said in the statement.
“While APA has made several regulatory applications over the weekend, the Qantas board considers that the current bid has failed.
“Accordingly, Qantas will proceed with strategies and plans for its future.
“The board thanks management and staff who have carried on normal operations so well while the APA offer was being considered by shareholders.”
While APA has indicated that it intends to seek an urgent review of the decision, it will beirrelevant.
“APA notes that a majority of Qantas shareholders (around 60 per cent by number) representing more than 50 per cent of Qantas shares have indicated their support for the offer,” APA said in a statement issued earlier on Sunday in reaction to the rejection by the Panel.
“The APA proposal offers an attractive 60 per cent premium above the three year average price of Qantas shares prior to speculation about the offer.”
But the Panel had one very important rebuttal for that argument: it pointed out that the late acceptance came from a single sophisticated shareholder who should have been well aware of the closing time and the date of the offer and the implications of not meeting that deadline.
As for the majority of Qantas shareholders argument APA well knows that it has nothing to do with the percentage of shareholders; that’s fallacious.
In takeovers it is all about a majority of the issued shares of Qantas or any other company in this country.
The $5.45 a share bid effectively failed on Friday night when shareholder acceptances did not reach the 50 per cent acceptance level required to extend the offer by the 7pm AEST deadline.
APA announced the failure and then early on Saturday morning issued another statement saying a late acceptance had been received and the Takeovers Panel was to be asked to approve the late acceptance.
APA claimed the belated acceptance from a US hedge fund gave it a 50.6 per cent of Qantas shares and enough to extend the offer for another 14 days.
“The panel has decided not to commence proceedings in relation to APA’s application,” the panel said in a statement late yesterday, a massive blow to the bid and the prestige of all involved in the highly controversial offer.
The list includes the Qantas board, chairman Margaret Jackson, CEO Geoff Dixon, Chief Financial Officer, Peter Gregg, Macquarie Bank and its head of investment banking Nicholas Moore, the Texas Pacific Group of the US and its local management, the Onex group of Canada and the Allco Finance and Allco Equity Partners group, both associated with Sydney financier, David Coe.
APA claimed the media coverage had confused the situation, a point explicitly rejected by the Panel in its reasons.
This is what the Panel said:
“The Takeovers Panel advises that it received an application yesterday from Airline Partners Australia Limited concerning APA’s off-market, cash takeover bid for Qantas Airways Limited.
The Panel has decided not to commence proceedings in relation to APA’s application.
APA’s Offer closed at 7.00pm on Friday 4 May 2007 in accordance with the terms of the Offer and APA’s public statements that the Offer would not be extended past that time and date. APA submitted that approximately 5 hours after the close of the Offer, and subsequent to APA’s announcement on 4 May that the Offer had closed, an offshore arbitrage and special situation investor holding Qantas shares, contacted APA and sent its acceptance form to APA for 98,445,907 Qantas shares, amounting to 4.96% of Qantas’ issued share capital.
APA submitted that had this acceptance been received within the Offer period, the Offer period would have automatically been extended for 14 days.
APA sought a declaration under section 657A that the closing of the APA offer and subsequent acceptance by the Late Investor constituted unacceptable circumstances.
APA sought orders to the effect that APA be required to continue the Offer as if the acceptance of the Late Investor was received prior to 7.00 pm on 4 May 2007.
The President of the Panel has appointed Andrew Lumsden, Jennifer Seabrook and Nerolie Withnall (sitting President) as the sitting Panel to consider the application.
APA has indicated to the Panel that it intends to seek urgent review of this Panel decision.
And here’s the nub of the Panel’s reasoning:
The circumstances of which APA has complained are in relation to a single sophisticated shareholder, with a significant interest (4.96%) in Qantas, who should have been well aware of the closing time and date for the Offer and of the
