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SYDNEY - The world's biggest aviation takeover is under way after Qantas Airways accepted a sweetened A$11.1 billion ($12.6 billion) buyout yesterday.
Under the deal offered by a consortium led by Macquarie Bank and United States private equity firm Texas Pacific Group, Qantas shareholders will get A$5.60 a share, up from an initial bid of A$5.50.
The agreement was struck less than a day after Qantas rejected the initial offer, as the bidders dropped conditions allowing them to walk away or be paid a break-up fee if the deal collapsed.
The new proposal means Australia's national carrier will become a privately owned company and delist from the Australian Stock Exchange after 11 years as a listed group.
Qantas chairwoman Margaret Jackson said the offer from the Airline Partners Australia consortium was 33 per cent higher than Qantas' closing share price of A$4.20 on November 6, when the prospect of a bid was first raised.
"The directors believe this offer allows Qantas shareholders to realise significant value for their shares that has not been fully recognised in the public market," Jackson said.
Subject to an opinion by independent expert Grant Samuel that the offer is fair and reasonable, the carrier's non-executive directors unanimously intend to recommend the bid, she said.
All directors intend to accept in respect of their own shareholdings.
The revised proposal follows negotiations with the consortium, which also includes local investment groups Allco Equity Partners and Allco Finance Group and Canadian buyout group Onex Corporation, after Qantas' rejection of its first offer.
The proposal also means Qantas will remain majority-owned and controlled by Australians and that the management team, including chief executive Geoff Dixon and chief financial officer Peter Gregg, will be retained.
"If this acquisition is successful, Qantas will remain a majority Australian-owned, Australia-based airline," Jackson said.
The buyers will get control of an airline that is forecast a 14th straight annual profit, withstanding an industry slump that triggered US$40 billion ($57.7 billion) of losses by global carriers since 2001.
Airline Partners Australia director Bob Mansfield said: "Airline Partners Australia will invest for a stronger Qantas over the long term.
"We will bring our proven experience in the airline and finance industries in support of Geoff Dixon and his management team."
Mansfield said there was no strategy to break up the airline, cut regional services or move maintenance operations overseas.
Qantas shares ended yesterday up A19c at A$5.28.
"It's still below its bid price of A$5.60, so I suspect there may be some concerns about it getting approval to go ahead," Paul Xiradis of brokers Ausbil Dexia said.
Airline Partners Australia believes the structure of its offer complies with various legislation and does not require approval under the Foreign Acquisitions and Takeovers Act.
Overseas investors hold less than 40 per cent of the airline with no single international investor holding more than 15 per cent.
Qantas is at present about 46 per cent foreign-owned.
A successful bid must comply with ownership laws limiting foreign investors to a total 49 per cent stake and individual foreign shareholders to 25 per cent each.
Under the proposal, Allco Equity will become the biggest shareholder with a 27 per cent interest.
Allco Finance will hold 8 per cent, Macquarie Bank less than 15 per cent, Texas Pacific 25 per cent, Onex 12.5 per cent, other foreign investors 11.5 per cent and Qantas management 1 per cent. The consortium said it had in place fully committed financing to fund the offer.
- AAP, BLOOMBERG
