Singapore twist in the Toll Patrick take over. The Age 24 March
MARKET rumours that Singaporean Government investment company Temasek is planning to take a stake in Virgin Blue have added new intrigue to Toll Holdings' struggle for control of Patrick Corp.
With the market absorbing Toll's newly revised $5.49 billion bid for Patrick, shares in both companies gained ground, Toll closing 20¢, or 1.4 per cent, higher at $14.25 and Patrick gaining 8¢, or 1 per cent, to $8.14.
Analysts continued to give guarded support to Toll's bid, with the proviso that Toll chief Paul Little needs to put more cash into the deal to sweeten it for shareholders.
An analyst with a leading broking firm told The Age that Toll had the capacity to put in another 50¢ a share of cash because of the expected returns from asset sales that would result from commitments to the Australian Competition and Consumer Commission.
The $86 billion investment giant Temasek came into the picture yesterday after news it had offloaded its 3 per cent Qantas stake because of the Australian Government's decision to block Singapore Airlines from the trans-Pacific market. The sales caused Qantas shares to slump from $4 to $3.65. Qantas closed yesterday at $3.71.
Market watchers suspect Temasek may partner Sir Richard Branson in the unwinding of Patrick's 62 per cent stake in Virgin Blue that will accompany a successful Toll bid.
The unwinding would raise Sir Richard's stake in Virgin Blue from 25 to 40 per cent, with Toll likely to hold on to about 10 per cent. That would leave up to half the company for Temasek, which is in turn the largest shareholder in Singapore Airlines.
The market believes a deal could then be done to wind Virgin Blue in with Singapore Airlines, giving Singapore access to the Australian domestic and Australia-US markets it has long coveted.
Singapore Airlines could conceivably work well with Sir Richard as they have been partners in Virgin Atlantic since 1999.
If this rumour were to become fact, Singapore Airlines' preemptive right to prevent the Virgin brand name to be used on international routes would no longer be an issue. Why create another new "brand" when the Virgin Blue name is established? The interlining of SQ passengers and oncarriage on
VB within Oz or to the West Coast of US would achieve SQ's original aims of accessing the trans Pacific route. There's always more than one way to skin a cat but I'll let you guys debate who gets the gig to fly the 777 and perhaps that's where the 777's are coming from.