A A$10.8 billion (US$8.9 billion) takeover bid for one of the world's most recognizable airlines, Qantas, finally collapsed yesterday, pulling the company's share price sharply down.
Shareholders -- believed to include international hedge funds that stockpiled Qantas shares recently in hopes of making quick profits on the takeover -- dumped the company's stock when trading resumed for the first time since a chaotic long weekend surrounding the buyout attempt.
Qantas shares plummeted more than 4 percent to A$5.13 from Friday's close of A$5.38 before recovering to A$5.20 after about one hour, with more than 100 million shares traded.
volatile
Analysts said they expected the shares to be extremely volatile in the immediate future, but noted that Qantas' underlying economic position was strong and the price may settle above the failed offer price from Airline Partners Australia (APA) of A$5.45 a share.
APA, a private equity-backed group led by Macquarie Bank and US buyout specialist TPG, said yesterday it would not pursue a legal loophole that may have allowed it to reach a minimum shareholding threshold before a deadline last Friday -- conceding defeat after earlier flagging a legal battle that may have lasted months.
APA needed 50 percent of shares by the deadline to win a two-week extension for the bid.
APA said although it could claim it reached the threshold under a clause in its offer documents that required shareholders who agreed to some shares to sell all of them, it would not do so because it did not want the turmoil to continue.
"APA has decided not to pursue arguments that it did achieve voting power in excess of 50 percent by the offer deadline," the group said in a statement. "APA believes that Qantas shareholders need more certainty and accordingly, it has determined that its bid should be treated as having lapsed on 4 May 2007."
`beyond doubt'
The Australian Securities and Investment Commission said in a statement it had responded to APA's comments by completing paperwork that "put beyond doubt" the end of the bid "in the interest of market certainty."
APA said it may yet launch another bid for Qantas.
Qantas chairwoman Margaret Jackson, who faces growing pressure to quit for strongly supporting the offer, confirmed it was dead and said any new bid would have to start from scratch.
Qantas cited Jackson as saying in a statement that the "foremost priority of the board and management now was the continuing successful operation of the company."
"This has been an extremely difficult process since the board decided to recommend APA's bid to shareholders," Jackson said.
The government on Monday warned Qantas it must comply with laws that ban foreign ownership of more than 49 percent of Qantas.
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