Qantas a takeover possibility

[bravoecho1]

There has been talk around the market that QF maybe a takeover target by a private equity fund.

Rumours are that they have given the fund a one month "look-see" at their books with a view to making a friendly offer.

The fund being talked about the most is CVC Asia Pacific.

 

[Rick93]

Struth! What would happen to our QF FF points?

Do you think the system would stay, with new owners?

Or, would we suffer the same fate as Ansett, regarding their FF points?

regards,

 

[NM]

Under the current Australian laws, Qantas cannot have more than 49% foreign ownership. Its also a publicly listed company so the only way for a "takeover", friendly or not, is for the prospective purchaser to buy a controlling number of shares from current share owners who want to sell.

Qantas management have been vocal about how the current 49% foreign ownership limitation is restricting their access to foreign investment capital which is in turn constraining their ability to grow. So perhaps they have found an Australian investor who is willing to provide the capital needed rather than sourcing the capital from foreign markets.

I would be surprised to see a private equity fund wanting to invest in an airline like Qantas. Yes it is profitable, but hardly returning dividends that could be considered attractive in terms of return on invested capital (ROIC).

 

[aus_flyer]

Do BA and Air NZ still own part of QF?
Any other airlines shareholders in QF?

 

[JohnK]

Struth! What would happen to our QF FF points?

I wouldn't be too concerned, yet, whether Qantas is a possible takeover target or not and what would happen with our FF points.

The biggest concern remains with the push for Jetstar taking over the majority of QF routes leaving less opportunities to redeem points on routes operated by QF.

For me anyway, I don't think it is a good time to be hoarding any FF points.

 

[markis10]

Do BA and Air NZ still own part of QF?
Any other airlines shareholders in QF?

No, according to the annual report super funds dominate the top 20 shareholder list which accounts for 75% of the shares held, this has changed a little bit in the last month but not that much.

 

[Standby]

3points
Firstly, You'd have to think too many punters have confused the MEL cup with the stockmarket.
2nd the conspiracy theorist in me sees and Aussie private equity Company set up with with a large amount of of UAE money allowing a Emirates buy out of Qantas forming an airline grouping that has everwhere from the sandpit to Europe/Africa/ India covered and its partner controling everything from OZ to the US /SE Asia and covering other stuff to UK via Sin BKK and HKG...and FF points a bigger network means they'll be better off as QF stay in oneworld and all of a sudden EK join as well...Conspiract theory....if you cant beat 'em buy em
Lastly, once yr not subject to the stock market you dont have to change yr business plan to please the market you can do as Flight Centre is doing and get on with running 2 vey succesful companies without scrutiny...look our NZ.....

 

[SeatBackForward]

Rumours are that Emirates is going to buy out BA

 

[bravoecho1]

Under the current Australian laws, Qantas cannot have more than 49% foreign ownership. Its also a publicly listed company so the only way for a "takeover", friendly or not, is for the prospective purchaser to buy a controlling number of shares from current share owners who want to sell.

Qantas management have been vocal about how the current 49% foreign ownership limitation is restricting their access to foreign investment capital which is in turn constraining their ability to grow. So perhaps they have found an Australian investor who is willing to provide the capital needed rather than sourcing the capital from foreign markets.

I would be surprised to see a private equity fund wanting to invest in an airline like Qantas. Yes it is profitable, but hardly returning dividends that could be considered attractive in terms of return on invested capital (ROIC).

CVC Asia Pacific actually have a way around the 49% rule by way of two means - firstly they aren't the only fund involved, only the lead fund who is leading the way and secondly the first letter in their initial denotes who is the true owner and they have a number of Australian companies that they use. The reason the fund is based in Hong Kong is for jurisdictional reasons.

Dividend wise the stock is currently yielding 5.1% on historical dividends and 5.4% on forecast, so combined with the usual private equity fund mantra of get in, turn the company on its head and sell it back to the market for between a 30-50% gain it is well within their sights.

The big question will be if an offer does eventuate do they have the insto's on side. My guess would be that they have already been talking to them and wouldn't have invested any time or money if they didn't have their support.

 

[bravoecho1]

3points
Firstly, You'd have to think too many punters have confused the MEL cup with the stockmarket.

Rumour was in the market on Monday morning

 

[NM]

Rumour was in the market on Monday morning

And the Qantas share price hit a yearly high of $4.31 yesterday, up from $4.20 the day before. So something seems to be happening. That is a pretty sharp jump for the QAN price.

 

[JohnK]

So something seems to be happening. That is a pretty sharp jump for the QAN price.

Confirmation that the rumour exists!

AMP, Qantas ripe for picking

By Carin Pickworth

BROKERS expect takeover activity to fuel support for locally listed targets over the next six months, despite concerns the share market is overpriced.

Wealth management giant AMP (amp.ASX:Quote,News), sugar conglomerate CSR (csr.ASX:Quote,News) and national airline Qantas (qan.ASX:Quote,News) have all outperformed the stock market in the last week amid rumours that they are takeover targets.

While the S&P/ASX200 index has risen 5.2 per cent this month, Qantas shares have soared more than 8 per cent to hit $4.31 over the same time.

Rumours have been circulating in the market that a foreign private equity firm has requested to conduct due diligence on the national icon.


More...

 

[Kiwi Flyer]

Confirmation of the rumours!

You mean confirmation that there is a rumour, not confirmation that the rumour is correct?

 

[JohnK]

You mean confirmation that there is a rumour, not confirmation that the rumour is correct?

struth.... Confirmation that the rumour exists!

 

[Kiwi Flyer]

struth.... Confirmation that the rumour exists!

can you confirm that? or is that just a rumour?

 

[bravoecho1]

On further reflection, if the parties concerned really did want to do something there is another way whereby a convertible note can be issued to the overseas entities with the view that the ownership rules are changed in the coming years and that note can be exercised once that occurs.

This is a very similar strategy to what occured when PBL was sold down to CVC Asia Pacific.