Australia’s flagship carrier Qantas has accepted an A$11.1bn ($8.7bn; £4.4bn) offer for the company, making it the world’s biggest airline takeover.
The Qantas board unanimously recommended that shareholders accept A$5.60 a share from a private equity consortium including Macquarie Bank.
Thursday’s move comes after the airline rejected an initial A$5.50 offer earlier in the week.
Qantas chairman Margaret Jackson said it was a “momentous day” for the firm.
Shares in the airline ended Thursday trading up 3.73% to A$5.28 following the announcement.
Foreign limits
In addition to Macquarie Bank, Australia’s largest investment bank, the Airline Partners Australia takeover consortium also includes Australian finance company Allco, US firm Texas Pacific Group, and Canada’s Onex.
The deal has been structured so that it meets Australian rules which limit foreign ownership of Qantas to 49%, with each foreign business only allowed a 25% share.
Allco’s stake in the consortium is 46%, while Macquarie and Texas Pacific both have 15%, Onex 9% and other unnamed foreign investors also 15%.
The takeover still needs approval by Australian regulators and Qantas shareholders, but the consortium has already pledged not to cut services.
“Qantas will retain the current Australian management and their growth strategy, a strategy that does not involve a break up of the airline, cuts to regional services, or the movement of maintenance operations overseas,” said Airlines Partners Australia director Bob Mansfield.
Despite suffering from the steep increase in fuel prices in recent years, Qantas remains one of the few global carriers to make a profit.
Australian Prime Minister John Howard said he wanted the airline to maintain its traditional character.
“I hope that the Qantas we know is the Qantas we keep,” he said.
“People like Qantas, it is an icon.”
The takeover consortium plans to de-list the airline and take it private.
By: steve rowell - 18th December 2006 at 01:54
Qantas pilots are considering a plan to personally invest $50,000 each as part of a “blocking stake” to stop the airline’s $11 billion sale to a private equity consortium backed by Macquarie Bank.
The stake by 2500 pilots would form part of a union campaign to encourage shareholders to reject the $5.60 a share offer from the consortium, Airline Partners Australia, to buy Qantas and turn it into a private equity company.
Unions are deeply worried that the bidding consortium plans to slash jobs, sell assets, cut regional routes and send maintenance work offshore to pay off debt, if the sale to a private investment fund is successful.
By: KabirT - 17th December 2006 at 06:33
The Qantas sale illustrates how little “the market” has learned from other airline takeovers…. One can but hope that our Treasurer is able to recognise the national interest considerations in ensuring that Qantas does not go down the same path as Ansett….. Former Ansett workers have still not received their full entitlements and New Zealand taxpayers were forced to bail out their own national carrier after Air New Zealand’s failure as a private venture…..
Qantas is not like just any other business…. it’s the national carrier of one of the world’s most geographically isolated countries…. It’s obvious that the huge debt burden required for the takeover will have to be serviced by means other than operating the airline with a view to its long-term viability…. It’s as obvious as the kangaroo on the tail.
true to all the points above… but i think the time has long gone when national pride would score more over extra $$$. But yes hopefully the treasurer and everyone involved will keep Ansett in mind.
By: steve rowell - 16th December 2006 at 23:24
The Qantas sale illustrates how little “the market” has learned from other airline takeovers…. One can but hope that our Treasurer is able to recognise the national interest considerations in ensuring that Qantas does not go down the same path as Ansett….. Former Ansett workers have still not received their full entitlements and New Zealand taxpayers were forced to bail out their own national carrier after Air New Zealand’s failure as a private venture…..
Qantas is not like just any other business…. it’s the national carrier of one of the world’s most geographically isolated countries…. It’s obvious that the huge debt burden required for the takeover will have to be serviced by means other than operating the airline with a view to its long-term viability…. It’s as obvious as the kangaroo on the tail.
By: KabirT - 16th December 2006 at 13:51
I highly doubt that in-flight service will be the main criteria that will get affected here. What the major thing that might get disrupted is ground handeling. I highly doubt Macquarie intends to hold the position that they will inquire from Qantas, seeing the bank’s previous track records on acquisitions, they will further see different arms of the airline to different companies. Yes, this may include the in-flight service and catering, but i have a feeling that this particualr section will be left alone, not for the Qantas employees sake but purely for the bank’s sake.
But we will have to see how this deal will go down.
By: Bmused55 - 14th December 2006 at 23:47
The Qantas in flight service is quite average perhaps you could say it’s good……but never outstanding
Either way, I have a feeling its about to get worse.
By: steve rowell - 14th December 2006 at 20:06
I fear this is the beginning of the end of QFs current outstanding in flight service.
The Qantas in flight service is quite average perhaps you could say it’s good……but never outstanding
By: Bmused55 - 14th December 2006 at 13:06
I fear this is the beginning of the end of QFs current outstanding in flight service.
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December 14, 2006 at 1:02 pm