Billionaire Sir Richard Branson's Virgin Group has rejected a takeover offer by ports operator Patrick Corp Ltd for budget airline Virgin Blue Holdings Ltd as too low.
Patrick Corp, which already holds 45.95 per cent of Virgin Blue, launched a surprise $1.90-per-share bid for all the ordinary shares in Virgin Blue that it does not already own, on Friday last week.
Patrick Corp's offer values the airline at $1.99 billion.
The Virgin Group said in a statement that its Swiss subsidiary, investment vehicle Cricket SA, had acquired 5.1 million more Virgin Blue shares on-market on Friday at an average price of $2.04.
Virgin Group said it had paid $10.1 million in total and now had a 25.1 per cent stake in Virgin Blue.
"As a 25.1 per cent shareholder, it is Virgin Group's view that Virgin Blue Holdings has much greater value than that indicated in the price being offered by Patrick Corp," the Virgin Group said in a statement.
"The airline has been a remarkable success in the Australian market, building a strong reputation for outstanding customer service at a competitive price, whilst maintaining low operational costs."
Virgin Group said it continued to support Virgin Blue, its growth prospects and future expansion plans.
"I am extremely proud of the Virgin Blue business and the great team of people who have brought real competition, genuine value and friendly air travel to the Australian people," Sir Richard said.
A Virgin Group spokesperson said the Patrick bid had come as "quite a surprise".
"It's still very early days. Over the next couple of weeks, we'll be working out the next steps and we'll go from there," she said.
Asked if the Virgin Group intended to further increase its stake, the spokesperson said: "We have no comment on exactly what our next steps will be in that area."
Patrick Corp said on Friday that its off-market offer, which is being made through its wholly-owned subsidiary, Plzen Pty Ltd, realised "full" value for Virgin Blue shares.
Patrick said the bid price represented a 13 per cent premium to Virgin Blue's January 24 closing price of $1.68.
Patrick chief executive Chris Corrigan said the offer was important to Patrick shareholders because it would allow the company to take a clear majority stake in Virgin Blue.
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