Airline Partners Australia
Encyclopedia
Airline Partners Australia (APA) is a consortium that made a A$
5.45 per share takeover offer for Australian airline Qantas
in December 2006. The takeover offer received the endorsement of the Qantas board in the absence of a better offer, however the proposed takeover failed to gain the required level of shareholder support, despite the extension of deadlines and reduction in requirements for acceptance.
, Macquarie Bank, Allco Finance Group
, Allco Equity Partners and Onex Corporation, was structured to comply with strict Australian ownership laws for Qantas (which must be at least 51% owned by Australians).
Margaret Jackson
(Chairman) said the proposal provided an attractive premium for Qantas shareholders, being 33 percent higher than the closing share price of $4.20 on 6 November 2006, the day before the first speculation about the offer; and 61 percent above Qantas' volume weighted average share price of $3.48 over the six months to that date.
Under the terms of the offer, the interim dividend that would otherwise have been payable in April 2007 would not be available. The Board decided that a fully franked special dividend could be paid during the bid period, in which case the offer consideration would be reduced by the dividend amount.
The takeover bid endorsed the existing management and structure of Qantas. The initial bid required 70% shareholder approval, however this was later reduced to 50%. Airline Partners Australia initially announced that it had failed in its bid for Qantas, having gained approval from only 46.5% of the company, when the offer closed at 7.00pm (Sydney Time) on Friday 4 May 2007.
Later that evening, however, APA received an acceptance from an additional 4.96% of Qantas shares, held by a Samuel J. Heyman
's hedge fund. This acceptance that would have taken the acceptance level above 50% and therefore allowed the bid to succeed. APA appealed to the Australian Takeovers Panel
in an attempt to have that acceptance included. However on Sunday 6 May 2007, the Takeovers Panel ruled that Airline Partners Australia did not have the minimum holding required at 7.00pm, Friday 4 May, as stipulated in the bid. They also saw no sufficient basis to re-open the bid..
Some fortnight later, after continued speculation of another takeover offer, APA issued a press release announcing that:
"APA has concluded that in the current environment and circumstances, a renewed offer on terms acceptable to APA would not be likely to succeed... On that basis APA has decided not to proceed with a renewed offer for Qantas at this time. APA thanks Qantas' board, management and employees for their professionalism during the bid process and wishes Qantas every success for the future."
(Australia's largest airport). There was concern that Macquarie Bank, being a major shareholder in both Qantas and Sydney Airport, would have incentive to place restrictions on commercial competitors using Sydney Airport, or favour Qantas in business dealings.
Airline unions raised concerns about the proposed takeover, amidst concerns that there would be heavy redundancies, or high numbers of jobs sent offshore.
Australian dollar
The Australian dollar is the currency of the Commonwealth of Australia, including Christmas Island, Cocos Islands, and Norfolk Island, as well as the independent Pacific Island states of Kiribati, Nauru and Tuvalu...
5.45 per share takeover offer for Australian airline Qantas
Qantas
Qantas Airways Limited is the flag carrier of Australia. The name was originally "QANTAS", an initialism for "Queensland and Northern Territory Aerial Services". Nicknamed "The Flying Kangaroo", the airline is based in Sydney, with its main hub at Sydney Airport...
in December 2006. The takeover offer received the endorsement of the Qantas board in the absence of a better offer, however the proposed takeover failed to gain the required level of shareholder support, despite the extension of deadlines and reduction in requirements for acceptance.
Company information
The consortium, comprising Texas Pacific GroupTexas Pacific Group
TPG Capital is one of the largest private equity investment firms globally, focused on leveraged buyout, growth capital and leveraged recapitalization investments in distressed companies and turnaround situations. TPG also manages investment funds specializing in growth capital, venture capital,...
, Macquarie Bank, Allco Finance Group
Allco Finance Group
Allco Financial Group was a fully integrated global financial services business, listed on the Australian Stock Exchange and head-quartered in Sydney, Australia. Major services provided are structured asset finance, funds management and debt and equity funding. Allco has over A$4.3 billion in...
, Allco Equity Partners and Onex Corporation, was structured to comply with strict Australian ownership laws for Qantas (which must be at least 51% owned by Australians).
Takeover bid
The initial proposal at $5.50 per share was rejected. The revised proposal followed negotiations with APA since the Board's rejection of its initial proposal. These negotiations resulted in the removal of unacceptable conditions and a substantial break fee as well as an increase in the price from $5.50 to $5.60 per share.Margaret Jackson
Margaret Jackson
Margaret Jackson, AC is an Australian corporate executive.Jackson was born in Warragul, Victoria, and studied at Warragul High School. She graduated with a Bachelor of Economics degree from Monash University and a Master of Business Administration from the University of Melbourne...
(Chairman) said the proposal provided an attractive premium for Qantas shareholders, being 33 percent higher than the closing share price of $4.20 on 6 November 2006, the day before the first speculation about the offer; and 61 percent above Qantas' volume weighted average share price of $3.48 over the six months to that date.
Under the terms of the offer, the interim dividend that would otherwise have been payable in April 2007 would not be available. The Board decided that a fully franked special dividend could be paid during the bid period, in which case the offer consideration would be reduced by the dividend amount.
The takeover bid endorsed the existing management and structure of Qantas. The initial bid required 70% shareholder approval, however this was later reduced to 50%. Airline Partners Australia initially announced that it had failed in its bid for Qantas, having gained approval from only 46.5% of the company, when the offer closed at 7.00pm (Sydney Time) on Friday 4 May 2007.
Later that evening, however, APA received an acceptance from an additional 4.96% of Qantas shares, held by a Samuel J. Heyman
Samuel J. Heyman
Samuel J. Heyman was an American businessman, corporate raider, hedge fund owner, and philanthropist. He was best known for his longtime chairmanship of the GAF Materials Corporation and International Specialty Products....
's hedge fund. This acceptance that would have taken the acceptance level above 50% and therefore allowed the bid to succeed. APA appealed to the Australian Takeovers Panel
Australian Takeovers Panel
The Australian Takeovers Panel is a statutory entity based in Melbourne, Australia. It is the primary Australian forum for resolving disputes about a takeover bid during the bid period itself...
in an attempt to have that acceptance included. However on Sunday 6 May 2007, the Takeovers Panel ruled that Airline Partners Australia did not have the minimum holding required at 7.00pm, Friday 4 May, as stipulated in the bid. They also saw no sufficient basis to re-open the bid..
Some fortnight later, after continued speculation of another takeover offer, APA issued a press release announcing that:
"APA has concluded that in the current environment and circumstances, a renewed offer on terms acceptable to APA would not be likely to succeed... On that basis APA has decided not to proceed with a renewed offer for Qantas at this time. APA thanks Qantas' board, management and employees for their professionalism during the bid process and wishes Qantas every success for the future."
Takeover concerns
Numerous concerns were raised in relation to the proposed takeover. These included Macquarie Bank's controlling stake in Sydney AirportSydney Airport
Sydney Airport may refer to:* Sydney Airport, also known as Kingsford Smith International Airport, in Sydney, Australia* Sydney/J.A. Douglas McCurdy Airport, in Nova Scotia, Canada...
(Australia's largest airport). There was concern that Macquarie Bank, being a major shareholder in both Qantas and Sydney Airport, would have incentive to place restrictions on commercial competitors using Sydney Airport, or favour Qantas in business dealings.
Airline unions raised concerns about the proposed takeover, amidst concerns that there would be heavy redundancies, or high numbers of jobs sent offshore.