Australian takeover regulators yesterday refused to step in and save a private equity-backed group's A$10.8 billion (US$8.9 billion) bid for Qantas Airways.
The decision could be the last straw for the troubled, five-month-old bid for the iconic company known as the "Flying Kangaroo," and could spell fresh trauma for the airline including pressure on senior management to quit for backing the deal.
The Takeovers Panel, a body empowered by the Australian Securities and Investments Commission to rule on buyouts, announced yesterday it would not consider an application by Airline Partners Australia (APA) to have a bundle of shares it secured after a Friday deadline counted as part of its stake in the company.
Without the bundle, the group -- led by Australia's Macquarie Bank, Allco Finance Group and TPG Inc -- falls short of the 50 percent minimum stake it needs to keep its bid alive for two more weeks. It needed 70 percent shareholder acceptances to get the loans it needed to succeed in its bid.
"The panel has decided not to commence proceedings in relation to APA's application," the body's director Nigel Morris said in a statement, adding another twist to a dramatic weekend for the deal, which would have been one of Australia's largest company buyouts.
APA initially announced late on Friday night that its bid for Qantas had failed, but then reversed itself a few hours later, saying a latecoming stakeholder had given it enough shares -- just -- to keep the bid alive for another two weeks.
Morris said APA's bid had expired at 7pm on Friday in accordance with its previously announced terms and that "in the absence of clear evidence to the contrary" there were no unacceptable circumstances that should be considered.
APA refused to concede defeat, saying it was seeking a review of the panel's decision.
"APA notes that a majority of Qantas shareholders, around 60 percent by number, representing more than 50 percent of Qantas shares have indicated their support for the offer," the group said in a statement.
It noted its offer represented a 60 percent premium on the average price for Qantas shares before the bid was announced.
If the bid fails, analysts said Qantas' share price would likely tumble when markets reopened today, as hedge funds who bought stock since the bid was announced cut their losses.
Qantas shares closed on Friday at A$5.38.
Board members, including Qantas chair Margaret Jackson and chief executive Geoff Dixon, were likely to face intense pressure over the failure.
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