Qantas agrees to $8.7bln takeover bid

Qantas Airways Ltd., Australia's largest airline, agreed on Thursday to accept a buyout offer of 11.1 billion Australian dollars ($8.7 billion) from a group led by Macquarie Bank and the Texas Pacific Group.

The board of Qantas recommended shareholders to accept A$5.60 (US$4.40) a share which is 33% higher than what it was a month before, when takeover speculation began. If this transaction is successful it would mark the world's biggest aviation takeover.

"The directors believe this offer allows Qantas shareholders to realize significant value for their shares that has not been fully recognized in the public market," said Qantas chairwoman Margaret Jackson. "I think we've done a very good job for the shareholders.”

The agreement was struck less than a day after Qantas rejected an initial offer of A$5.50 a share as unions feared thousands of job losses. The refusal sent Quanta’s share price down 2.6 per cent to A$5.09 in trading on Wednesday but this bid again resulted in an augment, valuing the company at company at 5.60 A$ a share.

“Qantas has a strong position in the domestic market and no other airline in the world has that kind of franchise,'' said Jason Teh, who helps manage the equivalent of $4.3 billion at Investors Mutual Ltd. in Sydney.

Airline Partners Australia, the consortium includes U.S.-based Texas Pacific; Macquarie Bank, Allco Equity Partners and the Allco Finance Group of Australia; and Onex, the Canadian leveraged Buyout Company.

The concern that the government may obstruct the takeover for it being against the national interest, made the trading of the Airline’s shares to be carried out below the offer price.

“I don't believe that aviation policy which is set by governments should take any consideration into the ownership of a particular entity provided it conforms itself to the regulations of a country,'' Chief Executive Officer Geoff Dixon said in an interview today. “Qantas is still the same company.''

The airline, for its red tail logo is known as ‘The Flying Kangaroo’ and carries two out of three domestic passengers. It was founded in Queensland in 1920 and has become an Australian icon ever since.