Qantas accepts increased offer for the airline

By NZPA

Thursday 14th December 2006

Qantas Airways Ltd has accepted an increased takeover bid for the airline that values it at $A11.1 ($NZ12.77) billion.

Under the deal offered by a consortium led by Macquarie Bank and US private equity firm Texas Pacific Group, Qantas shareholders will get $A5.60 per share, up from an initial bid of $A5.50.

The proposal also 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 chairman Margaret Jackson said the offer from the Airline Partners Australia consortium was 33% higher than Qantas' closing share price of $A4.20 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.

Jackson said that, 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.

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 rejected its first offer yesterday.

"These negotiations resulted in the removal of unacceptable conditions and a substantial break fee as well as an increase in the price," Jackson said.

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.

Airline Partners Australia director Bob Mansfield said the consortium will support Qantas as it undertakes necessary and large capital expenditure to underpin its current growth strategy and maintain its international competitiveness.

"A distinct point of difference is that Airline Partners Australia offers Qantas patient capital," said Mansfield, who is also deputy chairman of Allco Finance Group.

"We have a longer term perspective than the day-to-day equity market.

"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," he said.

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