Qantas for sale for $11 Billion.

[FlyingPhotog]

http://www.news.com.au/business/story/0,23636,20925324-462,00.html

CORPORATE raiders last night struck a deal worth $11 billion to take over Qantas, after sweetening an offer that was rejected by the airline's board earlier in the day.

Airline Partners Australia increased its offer by 10c a share to swing the Qantas board in favour of the deal.

A source close to the deal said insiders - after weeks of tense negotiations - were confident an agreement would be signed today.

Qantas's non-executive directors earlier said a $5.50 per share cash bid by the consortium was not acceptable, citing the complex terms of the offer. It is understood they were not prepared to accept a $100 million break fee if the deal failed to go through.

Most of the conditions have been changed to placate the Qantas directors.

[flyingbosshog]

Well thats what you call a shocker...... So who officially owns Qantas now?

[Christobal65]

Interesting Quantas isnt an airline i expected to see bought out. So any idea who now ownes them?

[Longreach747]

Qantas is still owned by those who owned it at 4pm EDST yesterday, the deal hasn't been signed as yet, nor has the ASX released anything that suggest a deal has been finalised.

it will come under political scrutiny also..but if it's sold the airline will remain HQ'd in Australia, board will be made up of Australians and the brand will pretty much stay the same.

the new owners look set to become Airline Partners Australia which consists of Allco Finance group, Allco Equity, Macquarie bank, Texas Pacific & Onex.

[egll]

Someone has to say it, it may as well be me:

There is no U in QANTAS.





Matt

[CathayPacific]

That's quick...

Depending on how the deal is structured, it may be very bad for QANTAS. The question is: where does not money (the $11b) come from?

In many cases of acquisition by these kinds of corporate raiders or private equity funds, a large proportion of the money actually comes from the acquired company itself. The concept is quite simple: Some corporate raiders find that company A is worthy of buying out, so they (as a group) talk to the company and offer a very high price, then they go to a bank and ask for a loan (which would be used to make up most of the money used in the buy-out). The interesting thing follows: why would a bank (or a consortium of banks) lend so much money (talking about billions here) to fund such a risky buy-out (due to the high price)? There must be some arrangement made to ensure that the banks' asses are covered, right? The answer is that the acquired company's assets are used by the group of buyers to underwrite the loan that is to be used to buy it out! With that money, the buyers successfully buy the company out, but leaving the acquired company deep in debt. You got to love those finance people, the one who invented this kind of financing is genius. They make huge money for everyone by completely ruining an extremely healthy company, and just use a few days to do so.

So if that's how QANTAS is being bought by these (potentially) ruthless buyers, then really have to say good luck to QANTAS.

[Longreach747]

http://www.asx.com.au/asx/research/CompanyInfoSearchResults.jsp?searchBy=asxCode&allinfo=on&asxCode=QAN&companyName=&principalActivity=&industryGroup=NO

sold...with lots of conditions!

[Christobal65]

Someone has to say it, it may as well be me:

There is no U in QANTAS.





Matt

DOH!!!

[DAL767-400ER]

Interesting, when less than 24 hours before, it was stated that QF would NOT be sold. Fascinating how fast decisions are switched around these days.

http://www.asx.com.au/asx/research/C...dustryGroup=NO

sold...with lots of conditions!

Of course with conditions, after all they are called QANTAS Airways LIMITED for a reason (yeah, very lame joke, I know)

[uy707]

Good luck to Qantas, which will keep flying as the "Spirit of Australia" and keep acting as the Kangaroo. Texas Pacific is still in the ride as a minor shareholder, it will be up for the Australian associates to keep it this way.
Alain

[sturla]

With that money, the buyers successfully buy the company out, but leaving the acquired company deep in debt. You got to love those finance people, the one who invented this kind of financing is genius. They make huge money for everyone by completely ruining an extremely healthy company, and just use a few days to do so.

That's a little too simplified.

In the case of leveraged buyouts they are using projected future earnings (of Qantas) to pay for the deal. It doesn't ruin the company however, though it leaves it in debt, often quite heavily, and thus with less financial muscle. This isn't that uncommon, but in the case of big companies like Qantas we are talking about bigger bucks than usual. But one shouldn't forget that the deal that brought Manchester United into US hands was a similar deal. And I don't recall anybody saying that the club is ruined now. This financing company involved will not get involved unless they genuinely believe there is money to be had and unless they get a good rate of return on their money (i.e. the interest paid on the debt is proportional to the risk).

Qantas is not financially ruined by this deal.

-Sturla

[Mungous]

I thought the Australian Government didn't allow a foreign body to own more than 49% of the airline.....?

[Longreach747]

I thought the Australian Government didn't allow a foreign body to own more than 49% of the airline.....?

61% will be Australian owned
39% foreign owned

[ptbodale]

Any company that has ONEX as an owner needs to be vigilant. While all companies are in business because of the investors ONEX would not be my choice of investor (ONEX is the smallest investor in the group I believe).

Just ask any Air Canada or Canadian Airlines International employee.

[AJ]

The Australian Goverment has approved the sale (the present government, hopefully not the goverment by year's end )

http://www.theaustralian.news.com.au/story/0,20867,21335411-601,00.html

They still need 90% shareholder approval and some other legal hurdles surpassed.