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QAN - Qantas takeover by MBL

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reece55

Joined
22 July 2006
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Just wondering everyone's opinion on Qantas - the bid is on the table by MBL et al @ $5.50 and yet the stock closed today at 5.09. I made myself a tidy sum playing barrier call warrants today, the thing opened at 4.94!!!!

Even though there is a fair amount of negative press on having an Australian icon company go private, the consortium appears to have fulfilled the 40% in aggregate and 15% any one foreign holder restriction, so you would have to think that provided they back off on the conditions of the offer, the independent directors would give it the nod - and good ole Dixon is sure to give it the tick, he stands to make a furken fortune.

Anyone have any opinions here????
 

Radio 'states' this morning the MBL consortium have lifted their offer to $5.60.... as a result if true QAN ,accepts the revised offer ............
 
Ongoing QAN is up amongst the most profitable airlines in the world (2002 it was the most profitable airline in the world), so it stands to reason that an astute investor like MBL would want to buy it.

The offer of $5.50 and $5.60 are respectively just 10 cents and 20 cents short of the all-time-high of $5.40 set in August 1999. That ATH was set before QAN had launched JetStar which has allowed them to sidestep long standing unionisation of their work force and hence reduce their cost base.

So as one of the most profitable airlines in the world, with an effective (government protected) monopoly on key routes, now with a successful no-frills carrier arm, trading at $2.91 as recently at July this year, the timing seems right for MBL et al to pounce.

Technically, the company is probably still undervalued at $5.50 or $5.60. On a chart QAN has been forming the mother of all consolidation wedges. Last month's bar was the breakout from that wedge.

If the takeover goes ahead then the share will be de-listed before it sees the high-side of $6, which I believe it could have easily achieved otherwise.
 
3 veiws of a secret said:
Radio 'states' this morning the MBL consortium have lifted their offer to $5.60.... as a result if true QAN ,accepts the revised offer ............
Click to expand...

They just announced this now, $5.60 it is.
 
Now how many jobs will be lost out of this takeover. I am guessing a lot as that is what Macquarie bank usually do
 
Is there really any question of whether the deal is good for existing QAN shareholders - it's obviously yes. The offer price is more than could be expected in the near term, the industry could be argued to be in a relatively prosperous period (as opposed to 9/11), and would always be a marginal real wealth creator (if at all).
It's all about the money to be made now by everyone concerned, and the longer term ramifications are something to be dealt with by the people who provide the equity.
Also, there has to be concern over the welfare of both the employees and passengers. It's highly likely that QAN will be forced to adopt US centric maintenance and safety regimes that put passenger safety at risk, either by outsourcing to a low wage country or cutting corners. Worst case is that QAN's enviable safety record will come to an end due to the above.

On the subject of MBL, known as the millionaires factory, it could very well be known soon as the house of cards.
 
DrD

I've completed the numbers on QAN. I would agree that this was an excellent deal for QAN holders & speculators............for MBL [or more accurately those that end up holding the debt securities] this is a bad deal.

The numbers on QAN are pretty grim reading. I'll post them up once I've actually written the summary of the analysis.

jog on
d998
 
Duc, It's all water under the bridge now I spose. With QAN, the practice of borrowing money and then paying a portion of those borrowings back as dividends makes no sense but I guess it keeps the shareholders happy. As for the Big Mac, you would assume they would have their ar*e covered with hedging etc in the event of a downturn. Or do they?. Could they be in trouble in a recession? Might be a discussion on the MBL forum.
 
QANTAS

I am confused about how the private consortium take over works.

The information I have so far is that the current shareholders have been given an offer slightly above market price for their shares. What I can gather from the letter is that 90% of the shares have to be brought for it to be taken off the market.

I think I read a while ago that what happens is the private consortium's take the company off the market, change it so it is more profitable and then sell it later by reissuing shares on the market. Is this correct?

Also, what happens if people don't accept the current offer? If it's under 90% that sell I guess they'd still own their shares. What happens if over 90% sell up - but you don't? Are you forced to sell or something?



Could someone clear it up for me? Also, are all take overs run the same way because I'd suggest there would be a few to come, such as Myer.
 
theasxgorilla said:
Duc, thanks for the analysis. I read your blog and it's very good.

So the question beckons...why the takeover?
Click to expand...

Macquarie has a number of fingers in a number of pies; they advise [for a fee] they take equity stakes, they provide financing, they lease assets, all driving revenues.

Why QAN?
The money for LBO's is currently available, make hay while the sun shines.
Who exactly is left holding what is not currently clear, I would guess that MBL would want to unload these bonds as quickly as possible.

QAN is a horrible business to LBO. The cash-flows are anaemic, and possibly terminal. Would the government step up to the plate if needed? Who knows, but MBL will be at my guess long gone.

jog on
d998
 

MBL do not lease assets to QAN - AFG do.

MBL is an equity partner - not a bond holder

MBL is going to generate more fees in the first year than their total equity contribution

Still a bad deal for MBL?

I don't think so...
 
BSD said:
MBL do not lease assets to QAN - AFG do.

MBL is an equity partner - not a bond holder

MBL is going to generate more fees in the first year than their total equity contribution

Still a bad deal for MBL?

I don't think so...
Click to expand...

Never actually said MBL leased anything to QAN. It was referring to MBL leasing assets as part of their overall strategy.

LBO's as already delineated are designed first & foremost to generate fees.
MBL will have sold the debt, ignoring any moral concerns, again already stated.

As regards a bad deal for MBL, no, a bad deal for the creditors, whoever they eventually turn out to be, again, already mentioned.

Have you anything new to add?
Or are you just reiterating the analysis already provided?

jog on
d998
 
Re: QANTAS

sirk said:
Could someone clear it up for me? Also, are all take overs run the same way because I'd suggest there would be a few to come, such as Myer.
Click to expand...

Good foresight but I think you're shooting behind the duck on this one

Quote from the below article:

"Texas Pacific Group narrowly edged out rival heavyweights Blackstone and Kohlberg Kravis Roberts to become the world's most prolific buyout group for 2006, helped by its $A1.4 billion purchase of the Myer department store chain and the pending $US8.7 billion acquisition of Qantas with Macquarie Bank."

http://www.news.com.au/sundayheraldsun/story/0,,20998375-664,00.html
 
The risk to MBL on this particular deal is loss of credibility should the deal blow up at some later stage. Investors rely upon MBL in selecting deals that will provide them with a return.......junk bond return, whatever.

If MBL selects poorly, their reputation as a deal maker is tarnished, and future deals become that little more difficult. Should a number go south, and that pretty much becomes all she wrote.

Looking at previous deals from MBL, QAN really stands out as one that falls outside their "area of expertise".

Possibly part of the reason [conjecture] is that with so much money in the LBO game currently, competition to find suitable LBO companies becomes far more difficult.

jog on
d998
 
theasxgorilla said:
Duc, thanks for the analysis. I read your blog and it's very good.

So the question beckons...why the takeover?
Click to expand...

OK first post here ever.. but I have seen the machinations inside the machine and Its my own opinion that they have been rejected on some BIG FCUK off deals lately and they need to secure something of note.. i mean namely the LSE takeover last year which would have been the ultimate feather in the cap for the 'colonials'. Also they are cashed up several good deals and divestments which have prolly been in the works for some time and allowed them to forcast thier liquidity to allow them to participate in the QAN takeover.

I think its a bit like when you are a anxious with a bunch of cash burning a hole in ur pocket. And let's keep things in perspective here, as there has been an absolute flurry of M & A activity in the preceeding few years and companies are more open than ever to TKOvers and mergers etc... so if the cash is on the table.. and it CLEARY is, then game on!

Just an opinion.
 
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