Scott Rochfort May 7, 2007 - 11:15AM Other related coverage
Qantas shares have opened higher on the prospect of a fresh bid for the airline despite warnings from Treasurer Peter Costello that any potential bidder will not get an easy ride.
Shares in the airline opened 2c higher at $5.40, amid expectations Qantas could face a fresh takeover bid from the Macquarie Bank-backed consortium, or a rival airline such as Singapore Airlines.
The airline's bouyant profit outlook has also helped support the share price, and avert earlier warnings from the consortium Qantas shares could fall as low as $4.20.
APA announced this morning it was exploring the "possibility of making a renewed'' $11.1 billion offer for the airline.
Despite criticisms from key Qantas shareholders that its $5.45 a share bid - which collapsed on Friday night - was inadequate, APA announced this morning its new offer would be pitched at the same price.
In a desperate bid to keep its dreams of grabbing the national carrier, APA said it was "exploring a number of alternatives'' after it only managed to secure 46 per cent of Qantas.
The Takeovers Panel yesterday threw out an appeal by the consortium to have the sale of a 4.96 per cent stake into the bid counted, despite it being lodge 5 hours after the takeover expired on Friday night. APA needed to secure 50 per cent of Qantas by 7pm on Friday to have the offer extended another fortnight.
APA had repeated warned the shares could slump as low as $4.20 if the bid failed.
"APA always intended to support the existing Qantas management team to achieve their goals to strengthen and grow the airline,'' the consortium said in a statement.
It failed to note how it also planned to gouge $4.5 billion out of the airline as part of a "capital management review''.
But it could be months before the consortium could get its hands on Qantas. Due to takeover laws, analysts estimate it could take three months before APA could lodge a new offer.
Airline Partners Australia has also been warned it will not have an easy ride should it renew its failed $11.1 billion bid for Qantas.
The Treasurer Peter Costello said today that any new bid by APA would have to go through the entire regulatory process again, including requiring fresh consideration under Australia's foreign investment rules.
"The bid that was put forward by Airline Partners Australia lapsed when the time limit expired last Friday night,'' Mr Costello said.
"If anyone wants to lodge a new bid the whole thing starts again, everything starts again.''
APA said this morning that it was reviewing all of its options including a renewed bid.
"APA is exploring a number of alternatives including the possibility of making a renewed offer for Qantas at $5.45 per share,'' it said in a statement.
However, Mr Costello said the consortium partners, which include Macquarie Bank and Allco Finance Group, would need to go through the same regulatory hurdles, as they did over the past five months.
"If a new bid is lodged then that will of course have to be dealt with through the Foreign Investment Review Board.''
Mr Costello also called on the board of Qantas to make it clear what their plans were for the future of the company.
"This is a message from the shareholders that a majority of the shareholders did not want to accept that offer as it was put within the time limit.
"The [Qantas] board will have to make a statement as to where it stands. The board recommended this offer, the shareholders or a majority of the shareholders did not accept the offer.
"I think the board now have to make a statement as to where they stand and what they intend to do in respect of the company.''
Some shareholders have indicated that chairwoman Margaret Jackson should step down.
Treasurer Peter Costello announced this morning the consortium would have to relodge the bid to the Foreign Investment Review Board for approval.
Given the growing unpopularity of the bid, it is likely to face increased scrutiny from the Federal Government, especially in the lead up to a tight Federal election.
The consortium could also face a tough battle convincing shareholders its $5.45 a share offer is adequate.
Aside from two key shareholders - Balanced Equity Investments and UBS Global Asset Management - already holding out for a higher offer, Qantas's shareprice outlook has brightened substantially since the bid was launched five months ago.
Over the weekend, Goldman Sachs JBWere analyst Paul Ryan put a $5.20 valuation on the airline. He predicted Qantas shares could hit $5.70 in 12 months, thanks to the airline's bouyant profit outlook.
"Takeover distraction may have resulted in some slippage in the delivery of targeted cost savings and Tiger Airways' pending entry as a third player in the domestic market poses some threat to yields,'' said the note.
"But on balance we still view the risk to earnings (and especially dividends) as being on the upside.''
with Mark Davis and Lisa Murray
QAN Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
(20min delay)