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CANBERRA - The A$11.1 billion takeover of Qantas now appears dead after a decision by Australia's takeover regulators to refuse an application to allow a late acceptance of its share offer.
In a move that also raises questions about the future of Qantas chairwoman Margaret Jackson and chief executive Geoff Dixon, the Takeovers Panel yesterday rejected Airline Partners Australia's bid to include the shares of billionaire American corporate raider Samuel Heyman, offered to the consortium five hours after its offer closed.
APA had asked the panel to set a legal precedent by retrospectively extending Friday's 7pm bid deadline to allow the inclusion of the 4.96 per cent of Qantas offered by Heyman, a former United States Justice Department lawyer who made his name and fortune with the 1980s takeover of asbestos, building products and chemicals manufacturer GAF Corporation.
"While we have consistently indicated to advisers for the bidding group this has always been a close call for us, we are hopeful our tender will facilitate the successful completion of this transaction," Jim Hoffman, chief executive officer of Heyman's fund, Heyman Investment Associates, told London's Times newspaper.
Among the reasons APA gave to the panel for an extension was a claim of "potentially misleading circumstances arising from media coverage".
But the panel described Heyman as "a single sophisticated shareholder ... who should have been well aware of the closing time and date for the offer and the implications of not meeting that deadline".
APA needed an acceptance level of 50 per cent to trigger a two-week extension enabling it to try for the extra shares it needed to reach its revised acceptance target of 70 per cent.
The new target was set after it became clear there was no chance of obtaining the original acceptance level of 90 per cent, requiring new financial arrangements that analysts feared would burden Qantas with a potentially dangerous debt load.
APA - a private equity consortium led by Australia's Macquarie Bank and including Australia's Allco Equity Partners and Allco Finance Group, Texas Pacific Group of the US and Canada's Onex Corp - said Heyman's shares would have been sufficient to push acceptances past the 50 per cent trigger point.
It turned to the panel, which, operating under the Australian Securities Investment Commission Act, arbitrates disputes about bids until the takeover period has ended.
It is endowed with wide powers to declare circumstances in relation to a takeover, or to the control of an Australian company, to be unacceptable.
In its application to the panel, the consortium sought a declaration that the closing of its offer and Heyman's late acceptance constituted unacceptable circumstances and sought orders to the effect that it be required to continue the offer as if the American's notice had been received before 7pm on Friday.
APA said no Qantas shareholder would be detrimentally affected by the granting of the order and that there was a "significant likelihood" that the consortium had in any event obtained more than 50 per cent of the airline when the offer closed.
But the panel said APA had announced to the market that it appeared the 50 per cent mark had not been achieved and that, if this was confirmed, the offer would not proceed.
