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SYDNEY - A consortium led by Macquarie Bank came closer to clinching an US$8.7 billion ($12.9 billion) takeover of Qantas yesterday after the airline released an independent report saying the offer was fair.
The report, by Grant Samuel & Associates, said the offer price of A$5.60 a share was within its valuation range of A$5.18 to A$5.98.
Qantas said its board had unanimously recommended shareholders accept the bid. Its recommendation had been conditional on the independent report finding the bid price to be fair and reasonable.
"Qantas has delivered year-on-year profit, growth and diversification. But while the business has prospered, the Qantas share price has not," chairman Margaret Jackson said in a letter to shareholders.
"The offer is the best available option to enable Qantas shareholders to realise significant value for their investment." Qantas shares are trading around A$5.36.
The A$A5.60 bid price values Qantas at more than 18 times forecast earnings, compared with P/Es of about 17.4 for Cathay Pacific Airlines and just over 13 for Singapore Airlines.
The report said any price above A$5.18 would be fair value.
Analysts said the report was no surprise and the bid was expected to succeed, but it raised questions about Qantas management's past criticism of how the market valued the airline.
"Qantas management seem to be so vocal historically in being critical of the market I am surprised to see that the independent experts' report seems to be very close to what the market was valuing Qantas at pre-bid," said Fabian Babich, an analyst at brokerage BBY.
The bid consortium, Airline Partners Australia, also includes private equity firm Texas Pacific Group, Allco Equity Partners, Allco Finance Group and Canadian investment firm Onex Corp.
Last week, Qantas raised its annual profit forecast for the third time in six months, helped by easing fuel prices and increased demand for travel.
However, that news was tempered by an announcement that Singapore's Tiger Airways wants to launch a rival domestic airline in Australia.
Qantas shareholders have until March 9 to vote on the offer.
The consortium last week lodged an application with the Foreign Investment Review Board for a review of the takeover.
The board has until March 7 to come up with a recommendation which will then go to Australian Treasurer Peter Costello, who has the power to block the deal if he rules it is not in the public interest.
- REUTERS
